China's first offshore tender hit by bureaucratic delays

CHINA: Conflict between China's National Energy Bureau and its State Oceanic Administration (SOA) has delayed progress of the country's first round of offshore wind projects and also threatens to hold up the second round, scheduled for the first half of this year

At the heart of the dispute are marine zones allocated by the State Oceanic Administration (SOA), which decides what type of development is permitted within each zone. The difficulty is that the SOA did not consider offshore wind projects when creating marine zones.


In 2010, the National Energy Bureau (NEB) failed to invite the SOA to participate in preparations for the public tender for the country’s first four offshore concessions, which are all in Jiangsu province — Dongtai (200MW inter-tidal), Dafeng (200MW inter-tidal), Sheyang (300MW offshore) and Binhai (300MW offshore).


One month after the NEB announced its tender the SOA readjusted its zoning, bringing it into conflict with the areas outlined by NEB in its tender.


Yang Xiaosheng, chief engineer of Longyuan Power, said his company has postponed its Dafeng project because the site now partially overlaps with the Jiangsu reclamation zones and bird protection areas. This is despite Longyuan already having altered the siting of its proposed wind farm three times.


The Dongtai project, developed by Shandong Luneng, has met with a similar problem. The developer said that proposed readjustments to the site location, moving it from 21 kilometres offshore to 32 kilometres offshore, make it less an inter-tidal project and more a true offshore scheme.


Datang Renewables, developer of the Binhai wind farm, said that although the location of its scheme is not affected, it size has been reduced by one third, lowering turbine unit utilisation and affecting wind power output.


Meanwhile, China Power Corporation's Sheyang scheme faces another difficulty: the beach landing site for its 220kV cables will now have to be buried underground to avoid a national nature reserve.


Investor disincentive

Changes to the areas designated for the four offshore wind projects will increase infrastructure costs and may prove a deterrent to investors. Nevertheless, Shi Lishan, deputy director of the new energy and renewables department at NEB, said China will encourage developers to begin building all four concessions later this year.


Industry insiders believe the projects will take five years to complete. The project with the earliest likely start is Longyuan's Dafeng. It could secure SOA approval by the end of this year.


The China Renewable Energy Industries Association fears the tender and concession delays could threaten the country's objective to develop 5GW of offshore wind by 2015 and 30GW by 2020. The Association’s secretary general, Zhang Ping, said: "I do not think we can fulfil the 5GW offshore wind power objective." He also expressed concern about the level of financial support available for the revised schemes. "The tender winning feed-in tariffs are too low. Considering construction costs, the offshore concession project developers will lose money".

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