CHINA RENEWABLE ENERGY INTERNAL MAGAZINE OF CNREC Consultants: Du Xiangwan

Xu Dingming

Shi Dinghuan

Bai Rongchun

Xu Xiaodong

He Dexin

Zhao Yuwen

Yin Zhiqiang

Yuan Zhenhong

Han Zaisheng

Hans Jorgen Koch

Peter Hjuler Jensen

Jorgen Delman

Anja Møller Rasmussen

Fernando Sánchez Sudon

David Kline

William Wallace

Editor in Chief:

Han Wenke

Shi Lishan

Executive Editor in Chief:

Wang Zhongying

Associate Editor in Chief:

Liang Zhipeng

Editorial Director:

Wang Zhongying

Ren Dongming

Deputy Editorial Director:

Gao Hu

Kaare Sandholt

Zhao Yongqiang

Wang Wei

Editor:

Shi Jingli

Hu Runqing

Luo Zhihong

Liu Jiandong



Fan Lijuan

Zhang Wanjun

Zhang Pei

Duty Editor:

Wang Wei

Art Editor:

Liu Qin

Strategic partner: National Climate Change Strategy Research and International Cooperation Center (NCSC ) CMA Public Meteorological Service Centre (CMA Wind and Solar Energy Resources Assessment Center) Hydropower and Water Resources Planning & Design General Institute State Grid Energy Research Institute Guangzhou Institute of Energy Conversion, Chinese Academy of Sciences Institute of Electrical Engineering, Chinese Academy of Sciences Renewable Energy Department of China Electric Power Research Institute Institute of Energy and Environment Protection, Chinese Academy of Agricultural Engineering Nanjing Hydraulic Research Institution Institute of Nuclear and New Energy Technology, Tsinghua University School of Renewable Energy, North China Electric Power University(NCEPU) School of Power and Energy, Northwestern Polytechnical University (NWPU) China Renewable Energy Society Chinese Renewable Energy Industries Association (CREIA) Chinese Wind Energy Equipment Association (CWEEA) China General Certification Center Suzhou Longyuan Bailu Wind Power Technique Vocational Training Center Co., Ltd., China Longyuan Power Group Corporation Limited CECEP Consulting Co., Ltd Address: B1915, Guohong Mansion, No. Jia11, Muxidi Beili, Xicheng District, Beijing, China Zip Code: 100038 Tel: +86-010-63908022 Fax: +86-010-63908024 E-mail: [email protected] www.cnrec.org.cn www.cnrec.info Copyright: All Copyright Reserved. Part of the contents and pictures are from the Internet. If you have any issue about copyright, please contact [email protected]. Published on 26 July 2013

 2 China Renewable Energy

CONTENTS China-U.S. Collaboration on Renewable Energy

04 12 17 25

U.S.-China Renewable Energy Partnership: Cooperation to Advance Clean Energy David Kline, William Wallace, Yongqiang Zhao China-U.S. Renewable Energy Trade and Investment Trend Peng Peng CHINA-US COLLABORATION ON RENEWABLE ENERGY STANDARDS, TESTING, AND CERTIFICATION William Wallace, Sarah Kurtz, Xie Bingxin US-China Energy Cooperation Program (ECP) Supporting U.S. China Renewable Energy Partnership US-China Energy Cooperation Program (ECP)

Industry Insight

28 35 41 45 50 53

High RE scenarios for China in 2050 Research team of CNREC Current Status of PV in China Wang Sicheng Progress and Challenge of New Energy Demonstration City Hu Runqing Challenges and Suggestions for the development of China’s Wind Power Industry Qin Haiyan The prospect of China PV market development Yang Shaonan Overview: U.S. Renewable Energy Markets & Policy American Council On Renewable Energy (ACORE)

  China Renewable Energy 3

China-U.S. Collaboration on Renewable Energy

U.S.-China Renewable Energy Partnership:Cooperation to Advance Clean Energy David Kline, National Renewable Energy Laboratory William Wallace, National Renewable Energy Laboratory Yongqiang Zhao, China National Renewable Energy Center

Introduction

In November 2009 in Beijing, President Obama of the United States and President Hu of the People’s Republic of China endorsed seven bilateral energy agreements representing new initiatives for joint action and cooperation on new and alternative clean energy topics. The U.S.-China Renewable Energy Partnership (USCREP), which focused on renewable energy joint research collaboration and cooperation, was one of these seven bilateral agreements. This article describes the background of the USCREP and its progress since the last annual Renewable Energy Industries Forum (REIF) in September 2011. Selected highlights of results of this collaboration include the following: • Completion of a Chinese national electricity sector planning model in partnership between

 4 China Renewable Energy

the Energy Research Institute (ERI), the China National Renewable Energy Center (CNREC), the Sino-Danish Renewable Energy Development Program in Beijing, and the U.S. National Renewable Energy Laboratory (NREL) • Collaboration and technical exchanges in support of the Solar Decathlon, an energy efficiency and clean energy sustainable house-design competition between collegiate teams, in China, to be held in Datong in August 2013 • Publication of a joint paper between NREL, the equipment supplier Second Wind, and HydroChina describing a validation experiment for an advanced SODAR anemometer technology

China-U.S. Collaboration on Renewable Energy • Initiation of a wind turbine wake effects analysis for a Chinese wind farm

a PV module round-robin2 testing exercise among 19 test centers in China

• Hosting of a workshop on “China-US Renewable Energy Project Evaluation and Business Model Development” in Shanghai in November 2011

• Continued technical exchanges on wind, solar, and grid integration standards, including studies prepared by the U.S.-China Energy Cooperation Program (ECP) during 2012-2013, which will be presented at the 3rd Renewable Energy Industries Forum in Shanghai on July 31, 2013.

• Hosting of the “China-US Solar Technology Cooperation and Resource Assessment Workshop” in Dezhou, China in December 2011 • China-specific side events at the Utility Variable Generation Integration Group (UVIG) 1 meetings in April 2011, April 2012, and April 2013 combined with separate technical discussions at NREL • Development of two complementary guidebooks on investing in the U.S. wind sector: (1) “Manual on Wind Power Investment in the USA,” by the Energy Cooperation Program and (2) “Overview of US Wind Energy Industry and Market” by the Chinese Wind Energy Association and USFOR Energy, LLC; Chinese partners are currently developing a guidebook on investment in the wind sector in China • Cooperation to facilitate enhanced Chinese participation in international standards forums, such as the IEC TC82 and 88 technical committees for solar and wind, several International Energy Agency tasks, Institute of Electrical and Electronics Engineers tasks, and key new initiatives on quality assurance (QA) standards • Technical exchanges between solar test centers at NREL and in China, including

History and Background

Following the Obama-Hu discussions on clean energy cooperation in late 2009, the U.S. Department of Energy (DOE) and the Chinese National Energy Administration (NEA) formalized the USCREP in a memorandum of cooperation (MoC). The stated objective of the MoC is to address significant barriers to the widespread deployment of renewable energy and advanced grid technologies in both countries, in order to promote accelerated deployment of those technologies with mutual and global benefits. Anticipated benefits include enhancing energy security, reducing emissions, protecting the environment, and creating new engines for economic growth and job As defined in the USCREP MoC, the partnership calls for cooperation in seven areas: (1) renewable energy road mapping, (2) renewable energy regional deployment solutions, (3) grid modernization (advanced transmission and smart grid technologies), (4) advanced renewable energy technologies (wind, solar, and grid technologies), (5) advanced biofuels,3 (6) policy and finance, and (7) standards and testing. The USCREP and the ECP began collaborating on renewable energy topics in 2010, leveraging private and public sector capabilities and

1

UVIG was formerly called the Utility Wind Integration Group (UWIG). In a round-robin test, the same test is carried out in several different laboratories and the results systematically compared. Round robin tests can help identify technical issues in any of the laboratories, or significant differences in procedures between the laboratories. 3 Cooperation for advanced biofuels is governed by a separate memorandum of understanding (MOU), signed in Beijing in December 2007 by the U.S. Departments of Agriculture and Energy, and the Chinese National Development and Reform Commission. The cooperative biofuels work is not covered in this article. 2

  China Renewable Energy 5

China-U.S. Collaboration on Renewable Energy resources. The ECP also participates in the partnership’s formal dialogue with the NEA and advisory groups on issues such as renewable energy policy and financing best practices, grid modernization, and advanced technologies. Management of the USCREP has been assigned by the U.S. Department of Energy to the National Renewable Energy Laboratory (NREL) on the U.S. side and by China’s National Energy Administration to the Energy Research Institute (ERI) for China activities. NREL and the ERI prepare annual operating plans under the direction and guidance of DOE and NEA in consultation with the working groups under the USCREP. Five technical tasks were established under the USCREP, each with a corresponding working group. The tasks and associated working groups consist of: (1) Policy, Planning, and Coordination, (2) Wind Technology Cooperation, ( 3 ) S o l a r Te c h n o l o g y C o o p e r a t i o n , ( 4 ) Renewable Grid Integration, and (5) Standards, Testing, and Certification. This task structure was developed by ERI and NREL and approved by the NEA and DOE to accommodate the priorities stated in the MoC that align with DOE and NEA technical programs and interests. New tasks may be added as needed.4

Summary of Task Activities and Achievements (1) Policy, Planning, and Coordination Working Group

This task, led by ERI and NREL, addresses policy and renewable energy planning and analysis issues, including policy analysis, energy system modeling and case study analysis for China, and exchange of policy and analysis information related to large-scale renewable

4

energy deployment. The task includes overall technical coordination of the USCREP, under the direction of DOE and NEA. Objectives • Perform joint energy system modeling and analysis to provide a framework that supports the assessment and refinement of national renewable electricity targets under the 12th Five-year Plan as well as long-term plans (by 2020, 2030, and 2050), and other policies and programs in China. • Develop case study scenarios describing alternative renewable electric deployment strategies at the national level. • Exchange information on international best practices for policies to support large-scale renewable energy deployment. • Assess strategies to support the requisite roles of provincial and local governments in implementing renewable energy deployment strategies. Highlights and Accomplishments • ERI, CNREC, the Sino-Danish Renewable Energy Development Program, and NREL jointly developed the China Renewable Energy Analysis Model – Electricity and District Heating Optimization (CREAMEDO). CREAM-EDO incorporates key components of the Danish Balmorel models5 and NREL Renewable Energy Deployment System (ReEDS). • DOE, NEA, NREL, ERI organized the 3rd Annual U.S.-China Renewable Energy Industries Forum, to be held in Shanghai on 31 July 2013.

The five working groups cover six of the seven cooperation areas called for in the MoC. Road-mapping work is integral to the policy and planning working group. As mentioned above, biomass is covered in a separate agreement. 5 Information on the NREL ReEDS model can be found at http://www.nrel.gov/analysis/reeds/. An introduction to Balmorel can be found at http:// www.eabalmorel.dk.

 6 China Renewable Energy

China-U.S. Collaboration on Renewable Energy • NREL provided support and consultation on the organization of the China Solar Decathlon, which will be held in Datong, China in August of 2013.. Next Steps • Analysis of China’s renewable energy deployment using CREAM-EDO to help address China’s critical grid integration challenges at the lowest possible cost • Energy systems case studies modeling with results submitted to the NEA.

(2) Wind Technology Working Group

The Wind Technology Working Group pursues joint wind technology research opportunities between U.S. and Chinese organizations with benefits to both countries. Current activities include: i) a joint research study modeling wake effects on the performance of wind farms using NREL models and ii) development of a guidebook on investment in the wind sector in China. Objectives • Support and accelerate U.S. and Chinese

Figure 1. Wind farm for wake effect analysis in Guazhou County Gansu Photo provided by HydroChina

efforts to deploy wind technology at speed and scale. • Develop research results that advance both Chinese and U.S. wind technology goals by improving technology and reducing the cost of wind power. Highlights and Accomplishments • NREL, HydroChina and the U.S. company Second Wind completed a validation test on an advanced Sonic Detection And Ranging (SODAR) anemometer. The resulting report6 concluded that the Triton SODAR unit that was tested showed a high data recovery rate and good correlation with reference comparison data, and concluded that it could be usefully applied in wind resource assessment, including for turbine siting. • The ECP published the “Manual on Wind Power Investment in the U.S.A.” as a guide for Chinese parties on how to invest in the wind sector in the United States. • The Chinese Wind Energy Association and USFOR Energy released a complementary manual and guidebook, “Overview of U.S. Wind Energy Industry and Market.” • The ECP completed a study on “U.S. Wi n d P o w e r S t a n d a r d s a n d M a r k e t Environment,” including comparison with Chinese standards and lessons learned. • NREL provided consultation on QA and data filtering to HydroChina in developing a data set describing wind turbine wake effects in a reference wind farm. Next Steps The wake effects study will be completed with a report on the methodology and results of the collaboration.

6

G. Scott, D. Elliott, and M. Schwartz, Comparison of Second Wind Triton Data with Meteorological Tower Measurements, NREL/TP-550-47429. National Renewable Energy Laboratory (NREL), Golden, CO., 2010. See http://www.nrel.gov/docs/fy10osti/47429.pdf.

  China Renewable Energy 7

China-U.S. Collaboration on Renewable Energy Figure 2: Workshop in Dezhou, December 2011 on technical issues related to solar PV development. Source: Photo from Wan Lin, China General Certification Center

The ECP wind standards study will be released at the 3rd Renewable Energy Industries Forum.

(3) Solar Technology Working Group

This working group held workshops covering several key issues, including (1) energy modeling, financing, and development of new business models for solar photovoltaic (PV) deployment, and (2) solar resource assessment techniques, best practices for PV project development, and distributed generation technical issues (Fig. 2). In addition, this working group cooperates closely with the standards and grid integration tasks. Objectives • Identify and propose solutions to barriers affecting large-scale grid-connected PV power stations and PV distributed energy generation applications in order to accelerate widespread commercial PV deployment in the United States and China. • Cooperation to demonstrate best practices for PV project development and execution for commercial utility-interconnected power stations, to encourage investment from the private sector (companies, banks, financial institutions).

 8 China Renewable Energy

Highlights and Accomplishments • NREL, the China General Certification C e n t e r, a n d o t h e r U S C R E P p a r t n e r s organized the “China-US Renewable Energy Project Evaluation and Business Model Development Workshop,” held in Shanghai in November 2011. U.S. and Chinese participants described best practices in solar energy finance and project structure and considered new business models for accelerating the deployment of solar PV power systems in China. • NREL, the China General Certification Center, and others organized the “China-U.S. Solar Technology Cooperation and Resource Assessment Workshop,” held in Dezhou, Shandong Province in December 2011. The workshop focused on solar resource assessment, solar project development, issues encountered in distributed energy generation deployment of PV, and initiation of a joint solar PV round-robin testing activity (Fig. 2). Next Steps The workshops and subsequent activities stimulated discussions with the National Energy Administration on cooperation in solar distributed energy generation, micro-grid

China-U.S. Collaboration on Renewable Energy demonstration and deployment projects in China. Future collaboration under the Solar Working Group will be determined during the 3rd U.S.China Renewable Energy Industries Forum in Shanghai in July 2013.

(4) Grid Integration Working Group

The grid integration task and working group represents a strategic cooperation between the (1) State Grid Corporation of China and its research institutes in China, and (2) NREL, UVIG, the Energy Foundation, and companies in the United States. During FY12, the USCREP facilitated several exchanges of grid integration delegations and participation in workshops between the United States and China. These exchanges resulted in an increased understanding of the technical issues affecting grid development in both countries, promoted business development, and provided information for advanced grid integration technology development and future planning in both countries.

most crucial to the successful integration of renewables on the grid in the United States and China. • Share information on lessons learned, experiences, future plans for grid integration, and technology trends. • Provide for technical exchanges on state-ofthe-art grid integration studies. Highlights and Accomplishments • In partnership with the Energy Foundation, the USCREP assisted several grid integration, micro-grid, distributed energy generation, and renewable energy resource forecasting delegation visits from China to the United States. U.S. experts also participated in workshops organized in China on grid integration and grid-interconnection technical issues.

• The working group facilitated Chinese participation in grid integration forums in the United States and globally, including UVIG meetings and the new 21st Figure 3: Wind Integration Test Center in Zhangbei of the State Grid Corporation of China Century Power Partnership, an managed by CEPRI, which is a partner in the USCREP Grid Integration Activities. initiative established by the Clean Photograph courtesy of Wang Weisheng of the China Electric Power Research Institute Energy Ministerial. Objectives • Increase mutual understanding of the issues

• The working group used UVIG and other forums to exchange information for grid integration experiences and discuss key challenges between U.S. and China organizations. Topics included wind and solar f o r ecas tin g , d is p atch o r d e r, demand response, market mechanisms, controlling renewable generation, ramping requirements for integrating renewables, net metering, load balancing, battery storage, operating reserves, and the use

  China Renewable Energy 9

China-U.S. Collaboration on Renewable Energy of electric loads as flexibility resources for integration. • Consultations were conducted with key organizations in China including the China Electricity Council, the China Power Investment Corporation, and provincial grid companies leading to increased understanding on grid interconnection/integration standards development. • The USCREP assisted the 21st Century Power Partnership in securing Chinese participation in its events. Next Steps • DOE and NEA have decided to increase the priority of cooperation for grid integration and distributed energy generation in the USCREP. • Discussions at the 3rd Annual U.S.-China R e n e w a b l e E n e rg y I n d u s t r i e s F o r u m will determine the specific direction for collaboration in this area over the coming year. • ERI and NREL will collaborate to develop priority activities in this task.

(5)Standards, Testing, and Certification Working Group

The standards, testing, and certification task and working group conducts cooperative activities to promote solar and wind standards and testing development. NREL and UL, in partnership with the China General Certification Center in Beijing (CGC), the China National Accreditation Service for Conformity Assessment (CNAS), and leading experts in China, work to promote Chinese participation in international standards forums, such as the IEC technical committees for solar and wind (TC82 and TC88) and the IEA. The Energy Cooperation Program in Beijing also has established cooperation with the National Energy Administration to prepare

 10 China Renewable Energy

wind and solar standards comparison reports and recommendations for joint standards development. CGC in Beijing has developed a number of MOUs for the purpose of promoting broad solar and wind certification collaborations. Objectives • I n c r e a s e C h i n e s e p a r t i c i p a t i o n i n international standards bodies, focusing on International Electrotechnical Commission (IEC) TC82 standards working groups for solar PV standards and the IEC TC88 working groups for wind standards to foster increased coordination on the harmonization of international standards • Support the international development process for new QA and performance standards for PV modules that can be accepted broadly in the international community • Extend cooperation to other PV standards areas • Increase the level of collaboration between U.S. and Chinese PV test centers to gain improvements in uniformity of test results in round-robin test exercises • Facilitate communication and personnel exchanges between PV and wind testing centers in the United States and China to promote consistency and increased uniformity in test results and procedures as well as mutual acceptance of solar and wind test results and certification results across centers. Highlights and Accomplishments • C h i n e s e p a r t i c i p a t i o n a n d o f f i c i a l membership in international standards forums, such as the IEC TC-82 solar PV standards working groups, has increased significantly due in part to the active facilitation of the cooperation activities

China-U.S. Collaboration on Renewable Energy Figure 4: Cooperation between test centers at NREL and the Chinese Academy of Sciences Source: Sarah Kurtz, NREL.

to develop new quality assurance (QA) standards. • ECP has prepared a U.S. China PV Grid Integration Standards Comparison Study designed to lay a good foundation for international cooperation on PV standards development in the future. • A formal PV module round-robin testing activity involving 19 testing laboratories in China completed its first phase of domestic testing with good results in July 2013 and will now extend the round robin to international test centers. • China and the United States cooperated in the IEC TC88 PT-5 group, which is responsible for developing the new 21400-5 standard for Design and Manufacturing of Wind Turbine Blades.

carried out under the USCREP. • Since 2011 China has increased engagement in several International Energy Agency working groups, participated in the IEC TC88 committee for wind, and initiated contacts with other standards organizations, such as the Institute of Electrical and Electronics Engineers in the United States • The USCREP established a list of PV standards of mutual interest and facilitated cooperation for joint development of several new standards, including PV module material standards and inverter qualification tests, and PV system and grid integration standards. • Chinese experts are participating in the new PV Module Quality Assurance Task Force

Next Steps • Gain approval of draft PV module QA standards in IEC TC82 and continue PV inverter and grid integration standards development • Complete the round-robin PV testing exercise • Release ECP reports on wind and solar PV integration standards at the 3rd Renewable Energy Industries Forum.

Conclusion

The USCREP provides an important and unique platform for cooperation between the two countries. It represents both a U.S.-China collaboration and a public-private partnership. As seen above, the USCREP has accomplished a number of key technical and commercial objectives. In July 2013, the Third Renewable Energy Industries Forum will engage additional partners and establish the basis for building on the USCREP’s past work in the coming year.

  China Renewable Energy 11

China-U.S. Collaboration on Renewable Energy

China-U.S. Renewable Energy Trade and Investment Trend Peng Peng, Director of Policy Research, Chinese Renewable Energy Industries Association

Renewable energy development has gradually become a common topic of mankind. As not only the two largest energy consumption and greenhouse gas emitting countries in this world, but the largest developing and developed countries, China and U.S. are both facing challenges and sharing mutual benefits on dealing with global climate change, developing clean and efficient energy and ensuring energy security, etc. Cooperation in these areas has a demonstration significance and global appeal.

 12 China Renewable Energy

China-U.S. Collaboration on Renewable Energy In fact, the two countries’ cooperation in the field of renewable energy already had a good start and certain foundations. The two countries have signed a series of agreements, such as "U.S.-China Peaceful Uses of Nuclear Technology (PUNT) Agreement", the "China-US Energy and Environment Cooperation Initiative book", "China-US energy Efficiency and Renewable Energy protocol" and so on. Besides cooperation, as China's economy continues to develop, renewable energy, like clothing, footwear, steel, tires used to, arises constant trade friction and became one of the hotspots of negotiations between the two governments.

countries will develop quickly and achieve a win-win situation. In 2012, the investment to Chinese renewable energy market was $ 67 billion, account for a quarter of total global investment. The U.S. market ranked second after China, with a $ 35.6 billion of investment. By the end of 2012, the Chinese PV cumulative installed capacity was about 7GW’; in the United States, it was around 7.5GW. For wind power, China's total wind power installed capacity is 70GW; U.S. cumulative wind power installed capacity is 60GW. The two countries are very close in terms of scale; and the trades between them are extremely frequent too.

In the 21st century, the two countries in the field of renewable energy product development have made great achievements. Based on different advantages for development, the scale of renewable energy trade between the two countries in recent years has grown significantly. Currently, the cooperation and competition coexist in their renewable energy field. The competition will become more and more intense as the market scale of renewable energy industry grows bigger and bigger. However, this is a normal market phenomenon. Under the strong competition, the renewable energy of these two

1. Trade

Pew Charitable Trusts recently released a research report. It shows that in 2011, China-U. S. clean energy products and services trade exceeded $ 8.5 billion. The figure below is the 2011 China-US clean energy trade flows in the solar, wind and energy smart technologies. The United States enjoyed surplus in these three sectors. In 2011, American solar, wind and smart technology products to China had trade surplus of approximately $ 530 million. Considering all aspects of the value chain, U.S. exports and trade to China actually exceeded Chinese exports

Figure1 : Total U.S.-China Clean Energy Trade Flows in 2011 (in 100 millions of U.S. dollars)

Source: The US-China Clean Energy Technology Trade Relationship in 2011, The Pew Charitable Trusts, 2013

40

37.15

35 30

28.02

25 20

U.S.Export

15 10

5.35

5

China Export

8.38 3.89

2.67

0 Solar

Wind

Energy Smart Technologies

  China Renewable Energy 13

China-U.S. Collaboration on Renewable Energy to the United States by $1.63 billion in 2011. China's overall exports are significantly more than the United States, but the United States has advantage in the renewable energy sector, which is distinct from other types of merchandise. In renewable energy field, America's main advantage comes from companies’ spirit of innovation and entrepreneurship. For example, U.S. companies excel in production and sale of complex, high-margin and high-performance goods. These include capital equipment for manufacturing solar panels and LEDs, specialty chemicals, and materials needed for production of solar and wind products, as well as controls for energy systems. In addition, U.S. companies are more active overseas than their Chinese counterparts. Chinese firms have only small assembly operations in the United States for renewable energy equipment.

world's top five solar cells manufacturers are Chinese enterprises. United States is the world's leading solar material suppliers and a major global producer of polysilicon. Many Chinese solar modules producers purchase crystalline silicon from the U.S. market. According to the latest Customs statistics, in April 2013, China imported 7,265 tons of polysilicon—a 12.93% growth from March and a 17.46% increase on an annual basis. 1,939 tons of which were from the United States, accounts for 26.7% of total imports, increased by 37.5% from March. For equipments, including photovoltaic polycrystalline silicon ingot furnace and other equipment, since domestic enterprises cannot achieve large-scale production yet, most of them were purchased from the United States. In 2011, U.S. renewable energy equipment manufacturers’ exports to China reached $ 2.2 billion. These data show that U.S. enjoys surplus on raw materials and equipment exports to China. The photovoltaic industry trade did not weaken the U.S. companies, but also played a good role for U.S. economic recovery.

1.1 Solar

Currently, the two countries’ enterprises in the renewable energy field, especially in the field of wind power and solar PV have formed a mutually reliant relationship. In fact, the two countries have common interests in the photovoltaic field. China’s advantage is that it has largescale manufacturing so that it can realize the large assembly of products like modules. The

1.2 Wind

In the wind power industry, there are already some outstanding Chinese wind power manufacturing enterprises listed on the American

Figure2: U.S.-China Solar Energy Trade Flows, 2011 (in millions of U.S. dollars)

Source: The US-China Clean Energy Technology Trade Relationship in 2011, The Pew Charitable Trust, 2013

3000 2500

2651 2204

2000 1500 1000 500 0

 14 China Renewable Energy

684

502 0

10 0

0

12

289 151 14 0

0

U.S.Export China Export

China-U.S. Collaboration on Renewable Energy capital market. The U.S. large manufacturing enterprises are also interested in the Chinese wind power market. Most of the domestic wind power equipment manufacturing companies are very young and only finished the absorbing of technologies for a quite short time; their capability to independently do research and development is generally not very strong, therefore, the related products exports from them to the American market are very few. While most U.S. enterprises have rich experiences in cross-border operations and technologies, the booming Chinese wind power market is important to them. Overall, more than $923 million worth of wind energy goods and services was exchanged between China and U.S. in 2011. Similar with solar, the U.S. wind industry excels in relatively high-margin specialty materials (fiberglass) produced by large firms and in sensitive electronic and other control systems, with U.S. trade to China totaling $534.9 million. China’s largest trade contributors are wind turbine towers—a trade driven almost entirely by logistical concerns rather than pure cost advantages—and turbine rotors manufactured under a U.S.-China joint venture. China’s wind energy exports to the United States totaled $388.7 million. Overall, U.S. firms had a net trade surplus of just over $146 million.

2. Investment 2.1 The United States

U.S. investment in renewable energy has been on the rise over the past decade, with over $300 billion invested in the industry since 2004. Although annual new investment decreased from 2011 to 2012, cumulative investment has increased steadily. Large corporate entities are increasingly embracing the industry, with VC investments in start-ups markedly higher than they were ten years ago.1 This investment has driven down costs in the sector, with the prices of wind and solar equipment decreasing by 40% and 90% respectively. 2 This trend in investment has been driven largely by private capital attracted to the industry by beneficial U.S. federal and state policy support.3 Renewable energy in America has long been a bipartisan issue; for the past 20 years, both Democratic and Republican governors have established and strengthened support for renewable energy in their respective states.4 This practice of propping the renewable energy industry up in its early stages follows a strategy pioneered with traditional fossil-fuel industries, all of which received government support before achieving the scale necessary for their current

Figure3: U.S.-China wind energy trade flows, 2011 (in millions of U.S. dollars)

Source: The US-China Clean Energy Technology Trade Relationship in 2011, The Pew Charitable Trusts, 2013

325

350 300 250

196

200

160

150 50 0

103

73

100 0

0

26

7

0

0

34

U.S.Export China Export

1

Shapiro, Andrew. REFF-Wall Street. New York City. 25 June 2013. 2 U.S. Partnership for Renewable Energy Finance, Renewable energy Policy Driving Capital Investment.2013 3 Ibid. 4 Ibid.

  China Renewable Energy 15

China-U.S. Collaboration on Renewable Energy favorable cost structure.5 The solar and wind industries have already achieved significant improvements in their cost structure with relatively smaller increases in scale, and there is increasing optimism that the time horizon for wind and solar energy to compete without subsidies is within sight. 6

2.2 China

By some estimates, China is already the leading global investor in renewable energy infrastructure, and is increasing its overseas investments in renewable energy, particularly solar and wind. In Domestic market, solar was the star performer in China, jumping from $13.9 billion in asset finance in 2011 to $24.7 billion in 2012. Wind, meanwhile, managed only a small rise from $26.3 billion to $27.2 billion as some projects were delayed because of grid connection issues. The surge in China’s solar development came as clear national feed-in tariff, falling system costs enabled developers to see a return. Also, manufacturers, faced with oversupply in the industry worldwide, opted to develop PV projects to sale their productions. For oversea market, China has made at least 124 investments in solar and wind industries in 33 countries over the past decade. Of the investments for which data were available, the cumulative value amounted to nearly US$40 billion in 54 investments, and the cumulative installed capacity added was nearly 6,000 MW in 53 investments7. The United States was the leading destination, with 8 wind and 24 solar investments.

Conclusion

The intention of the United States to initiate the antidumping and antisubsidy investigations against China’s PV products or wind power tower is to protect its domestic industry. However, punitive tariffs are not helping the 5

development of the industry, but weakening the entire country's competitiveness in the international market. Disagreement cannot be avoided at the early period of cooperation. However, by finding a balance point between both sides’ benefits in frictions, the trend of cooperation is inevitable too. Punitive sanctions appear to favor short-term measures, but in the long run, the transaction costs will be detrimental to both sides. The maximization of single benefit has already been proved cannot exist long in game theory and by doing it, the partial interests already gained will also be lost. Cooperative game is the right strategic choice for the longterm development. Win-win situation will benefit both sides. In a long run, China and U.S. can make their respective advantages in renewable energy field complementary to each other. For the United States, now its renewable energy technology, energy saving and emission reduction technology and R&D level were already the world’s lead and are proving a solid foundation for Sino-U.S. cooperation. U.S.’s exports of advanced renewable energy technology equipments to China will not only help to strengthen China’s capability to deal with energy and environmental problems, but will also bring tremendous business opportunities and profitable returns to U.S. investors. China not only has the support from a huge market demands, but its cheap and fine manufacturing products will reduce the renewable development costs for the whole world, including the United States. Adhere to a win-win thinking requires us to consider mutual benefits and complementary advantages, so that to promote a deep development of the strategic cooperation in the Sino-U.S. renewable energy industry. By doing that, the two sides will both be able to take advantage of international society, to advocate the sharing of green technologies and to promote the establishment of cooperative mechanism between countries in the world. Special thanks to the American Council On Renewable Energy (ACORE) for its contribution to this article.

McGinn, Dennis. "POLITICO." POLITICO. 24 June 2013. Web. 02 July 2013. U.S. Partnership for Renewable Energy Finance, Renewable energy Policy Driving Capital Investment. 2013 7 WRI, China’s Overseas Investments in the Wind and Solar Industries :Trends and Drivers 6

 16 China Renewable Energy

China-U.S. Collaboration on Renewable Energy

CHINA-US COLLABORATION ON RENEWABLE ENERGY STANDARDS, TESTING, AND CERTIFICATION William Wallace, Sarah Kurtz, National Renewable Energy Laboratory Xie Bingxin, China General Certification Center

During November 2009, the U.S.-China Renewable Energy Partnership agreement was authorized in Beijing by Presidents Obama and Hu from the U.S. and China. One of the principal tasks under this new program is the collaboration of the United States and China on the topic of renewable energy standards, testing, and certification with an initial focus on solar PV and wind topics. Rapid development of renewable energy technologies and markets, particularly for wind and solar applications, has created demands for new and updated standards in both countries, consistency between testing center results, harmonization of standards and certification processes, and potentially mutual acceptance of testing and certification results. This paper will describe and discuss the activities that address these issues, which have taken place under the bilateral collaboration.

  China Renewable Energy 17

China-U.S. Collaboration on Renewable Energy 1. INTRODUCTION

China’s rapid growth in the manufacturing and deployment of renewable energy technologies, particularly wind and solar, is creating internal demands to solve technical issues representing barriers to domestic market expansion, and to more actively integrate with the international community in collectively addressing standards, testing and certification issues. Within the past few years, China has become the leading country for wind power installations, 12.9 GW in 2012 for a cumulative total capacity of 75.3 GW (1), and the second largest PV module market in the world, 5GW in 2012 for a cumulative total capacity of 8.3 GW (2), with a rapidly growing emerging domestic grid-connected market. Cooperation at the international level is becoming increasingly more important to develop solutions for standards, testing and certification issues, and as two of the leading countries for renewable energy development and deployment, China and the United States are important partners in this process. One of the mechanisms for specific cooperation between the United States and China is the U.S.China Renewable Energy Partnership (USCREP), which was established by a Memorandum of Cooperation (MoC) signed in 2009 by the U.S. Department of Energy and the Chinese National Energy Administration (NEA). Five active areas under the agreement include: i) policy, ii) solar research and development, iii) wind research

and development, iv) grid integration, and v) standards, testing, and certification. Cooperation in principle for wind and solar standards, testing, and certification is focused on work within the framework of existing international organizations.

2. SOLAR AND WIND STANDARDS 2.1 Cooperation Framework

Under the U.S.-China Renewable Energy Partnership, the U.S. Department of Energy through the National Renewable Energy Laboratory (NREL) is supporting cooperation with China for standards, testing, and certification focusing on solar PV and wind technologies. The China General Certification Center (CGC) in Beijing is the lead organization for this cooperation on behalf of the Chinese NEA. CGC provides the necessary linkages with the national standards organizational structure in China shown in Fig. 1 and Table 1. CGC also provides linkages to a number of international o rg a n i z a t i o n s i n v o l v e d i n t h e U S C R E P cooperation. CGC is the key organization in China for solar PV and wind certification. As well as working directly with industry and with testing centers in China, certification organizations can also operate their own testing centers and can be involved in or lead new standards development. For example, the CGC provides PV module

Fig. 1: Relationship of Chinese standards organizations

 18 China Renewable Energy

China-U.S. Collaboration on Renewable Energy TABLE 1: STANDARDS ORGANIZATIONS IN CHINA AQSIQ

General Administration of Quality Supervision, Inspection and Quarantine

SAC

Standardization Administration of China

CNCA

Certification and Accreditation Administration

CB

Certification Body

CNAS

China National Accreditation Service for Conformity Assessment

CCAA

China Certification and Accreditation Association

certification under its Golden Sun label; it also operates a large-scale wind blade test center in Baoding, China; and it is involved in developing new solar and wind standards. The development of domestic standards in China is robust and can be classified as national and industry standards. Certification regulations are also developed for product certification. In the Renewable Energy Partnership, the focus of cooperation with China is participation in international standards bodies, e.g., the International Electrotechnical Commission (IEC), and with international standards and testing and advisory organizations, e.g. Underwriters Laboratories (UL) and the International Energy Agency (IEA). Technical committees under the Standardization Administration of China (SAC) perform similar functions as technical committees in international bodies; e.g., SAC’s TC 90 parallels the IEC’s TC 82 solar committee in overlapping interests. The membership of the working group under the Renewable Energy Partnership currently consists of NREL, Underwriters Laboratories Inc. (UL), Intertek, CGC, TÜV Rheinland Photovoltaic Testing Laboratory LLC (TÜV PTL), and the China Electric Power Research Institute (CEPRI). The list is expanding. The Renewable Energy Partnership also cooperates with solar and wind standards activities of the Energy Cooperation Program (ECP) in Beijing, which is an organization of U.S. companies with business

interests in China (3).

2.2 Solar Standards Cooperation

In China, the solar standards cooperation effort under the Renewable Energy Partnership is led by CGC; and NREL coordinates U.S. efforts. Globally, China leads solar PV module production and is undergoing rapid expansion in its domestic market development, with large grid connected PV power plants and large-scale PV building integrated systems initially being supported by China’s Golden Sun program (4), and now being supported in larger-scale deployment programs of the NEA and through market expansion. The volume of manufacturing production and acceleration of system deployment have created technical problems that call for urgent attention and near term solutions. Among these issues are needs for quality control in manufacturing and quality assurance standards, improved component and system testing and certification procedures in accordance with international standards, and new system acceptance and grid interconnection standards for solar PV systems. During the IEC TC 82 meeting in May 2011 in Shanghai, visits of experts from NREL and UL to Chinese companies and standards experts facilitated U.S.-China cooperation on solar standards. During the past two years, the U.S. and China have collaborated in standards development as reflected in Table 2, which provides a subset of standards under

  China Renewable Energy 19

China-U.S. Collaboration on Renewable Energy TABLE 2: SUBSET OF STANDARDS OF U.S.-CHINA MUTUAL INTERESTS IN DEVELOPMENT Organization

Standard

Description

IEC JWG1

IEC 62257 Series

Updated series of new standards based on Chinese GB standards for Solar Street Lights, PV Power Solar Home Systems and Village Power Plants

IEC WG-2

IEC 62804 ed. 1

System Voltage Durability Test for Crystalline Silicon Modules – design Qualification and Type Approval

IEC WG-2

IEC 62805-1 ed. 1 IEC 62805-2

Test Method for Total Haze and Spectral Distribution of Haze of Transparent Conductive Coated Glass for Solar Cells, and Optical characterization of transparent conductive coated Glass for Solar Cells Part 2: Test Method for Effective Hemispherical Transmittance and Reflectance

IEC WG-3

IEC 61727

Photovoltaic Systems-Characteristics of the Utility Interface

IEC WG-3

IEC 62446

Grid Connected PV Systems – Minimum Requirements for System Documentation, Commissioning Tests and Inspection (Update)

IEC WG-3

IEC 62817

Solar Trackers for PV Systems – Design Qualification

IEC WG-3

IEC 62548

Design Requirements for Photovoltaic Arrays

IEC WG-3

IEC 62738

Design Guidelines and Recommendations for Photovoltaic Power Plants

IEC WG-3

IEC 62748

PV Systems on Buildings

IEC WG-6

IEC 62109-3 IEC 62109-4

Safety of Power Converters for Use in Photovoltaic Power Systems – Part 3: Particular Requirements for PV Modules with Integrated Electronics and Part 4; Particular Requirements for Combiner Box

IEC WG-6

IEC 62606

General Requirement for Arc Fault Detection Devices

IEC WG-6

IEC 62093 ed. 2

Balance of System Components for Photovoltaic Systems-Design Qualification Natural Environments (Inverter Standard)

IEEE

IEEE 1547-4

IEEE Guide for design, Operation, and Integration of Distributed Resource Island Systems with Electric Power Systems (Micro-Grid) – Reference for new code for micro-grids

PVQA

IEC Target

Technical Specifications for: Quality Management Systems – Particular Requirements for the application of ISO 9001:2008 for Photovoltaic Modules

development in IEC, IEEE, and other standards organizations of mutual interest. These interests cover a broad range of issues across the value chain for solar PV commercialization, including materials standards and PV module quality assurance standards, rating systems, and test procedures; balance-of-system component standards for inverters; and standards at the system and grid-interconnection levels. As installed PV systems become larger and represent a significant penetration on local and regional grids, utility companies are also becoming more concerned with the operation of intermittent resources on grids. As a result of the increasing interest in China’s participation in the IEC, with the help of the IEC TC82 Secretariat (Liang Ji is the Assistant Secretary of TC82), CGC, and other China standards organizations, active  20 China Renewable Energy

membership has increased to 29 members in 2013 participating in all TC 82 working groups.

2.3 PV Module Quality Assurance Task Force

One specific standards initiative that is being assisted by the Renewable Energy Partnership is the development of a new international PV module rating system and quality assurance standards, initiated by NREL and AIST. The objective of the initiative is to develop a new PV module rating system to assess PV module durability over decades of exposure to regional stresses under variable climatic conditions. This goes beyond the IEC 61215, IEC 61646, and IEC 62108 qualification test standards that set a minimum design criterion. The development of a single set of test procedures to improve

China-U.S. Collaboration on Renewable Energy

the accuracy of quantitative PV lifetime predictions would meet not only the needs of PV manufacturers, but also reduce risks for investors, insurance companies, project developers, and the design of incentive programs. New quality assurance standards will relate to reliability of module design, quality assurance in module manufacturing processes, and test procedures. International participation in the new initiative is facilitated by the establishment of a PV Quality Assurance (QA) Task Force and interactive website (http://pvqataskforceqarating.pbworks. com). Ten task groups address: i) guidelines for manufacturing consistency, ii) testing for thermal and mechanical fatigue, iii) testing for humidity, temperature, and bias, iv) testing for diodes, shading and reverse bias, v) testing for UV, temperature, and humidity, vi) communication of the results, vii) PV QA testing for wind loading, viii) PV QA testing for thin-film PV, ix) PV QA testing for CPV, and x) QA testing for connectors in junction boxes. Under the Renewable Energy Partnership, an outreach effort has been continuously directed at Chinese companies and standards experts, resulting in significant Chinese participation and support of the initiative. CGC, Trina Solar, QC Solar, and Yingli Americas are

a few of the 18 Chinese companies supporting the Task Force. One recent result of Task Force activities with China support is the development of a proposal for supplemental requirements to ISO 9001-2008 for quality management systems for PV manufacturing (5).

2.4 Wind Standards Cooperation

Due to the rapid development of wind technology and large scale deployment of wind in China, there is a concurrent rapid development of China’s system of national and industry standards to keep pace with changing needs. The Renewable Energy Partnership exchanges information with the China General Certification Center and the Standardization Department of the China Electrical Equipment Industry Association to identify existing standards and monitor the development of new standards in the wind industry. There is a focus on standards associated with large-scale grid connected technologies, but small wind turbine standards are also of interest. A priority of the Renewable Energy Partnership is participation in international standards bodies, such as the IEC, for direct cooperation in the wind sector. One example of China and United States cooperation is joint participation in the   China Renewable Energy 21

China-U.S. Collaboration on Renewable Energy IEC TC88 PT5 for wind turbine blade development. Project Team 5 (PT5) covers a technical scope of blade design, blade manufacturing requirements, test methods, blade handling, and field operation and maintenance, and the chairman and secretary of PT5 are from China and the United States respectively.

3. TESTING COLLABORATION

3.1 U.S. and Chinese PV Test Center Collaboration

Cooperation between PV testing centers in the United States and China under the Renewable Energy Partnership was initiated in 2009 with exchanges between NREL’s PV Outdoor Test Facility (OTF) in Golden, Colorado, and the Chinese Academy of Science (CAS) system of PV test centers managed by the Institute for Electrical Engineering in Beijing. The CAS test centers reside in Beijing, Nanjing, Xining, and Lhasa. Test center research collaboration consists of: i) comparison of cell and module calibration procedures and exchange of calibrated samples, ii) examination of standardized cell/module measurement and test procedures and recommendations for improvements in implementing relevant standards and best practices, iii) checking calibrations of solar simulators for indoor measurements and solar radiation measurements for outdoor tests, and iv) examining challenges for differences in test conditions in north and central China vs. dry, high altitude conditions in western China for outdoor measurements. NREL also has had long term collaboration with the National Institute of Metrology in Beijing for exchange of calibrated cells.

3.2 PV Round Robin Test Activity

During 2011, the China General Certification Center initiated the organization of a PV module and cell round robin test activity, which was formally announced in Dezhou during December 2011. The lead organizations for this activity are the China National Accreditation Service for conformity Assessment (CNAS), the China National Institute of Metrology (NIM), and the China General Certification Center (CGC). NREL serves as an advisor to the activity and will be one of the participating test centers under the Renewable Energy Partnership. China is conducting the round robin testing as an international activity with prospective participating test centers in China, including Taiwan, Japan, Germany, and the United States. The objectives of the PV round robin test activity are: i) to compare and assess the level of conformity between Chinese PV test center testing procedures and results, both internally and with international test centers, ii) identify and quantify  22 China Renewable Energy

China-U.S. Collaboration on Renewable Energy Fig.2 A representative result of the China domestic Round Robin Test

Deviation of PV module parameters 0.03 0.02 0.01

Isc

0 ‐0.01

Voc 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Pmp

‐0.02 ‐0.03 sources of discrepancies in the test data, and iii) recommend improvements in testing and calibration procedures, test center operations, and system for monitoring testing centers and their accreditation and use of testing results for PV module certification in China. Test centers will follow the IEC 60904-1 measurement of photovoltaic current-voltage characteristics international standard. In December 2012, 19 Chinese PV labs completed the round robin tests domestically. After 6 months of analysis, the report for the domestic results will be released by CNAS and CGC in July, 2013. The results indicate that the variances between most labs are in an acceptable range. A representative distribution of the results can be seen in Fig. 2. In the next phase, CGC and NREL will initiate the international component of testing.

3.3 U.S. and Chinese Wind Test Center Collaboration

Mutual interests between Chinese and U.S. wind testing centers accommodate the full range of testing across the value chain for component development, turbine assembly, field testing, deployment and commercialization; including, wind turbine blade testing, dynamometer testing, turbine type testing, and certification. Mutual interests include consulting in setting up new test centers; comparing test procedures and

  results; cooperation for round robin testing, of actual components or review of test results; and exchange of personnel to share experiences between test centers. Under the Renewable Energy Partnership, information exchange has occurred between the testing facilities of NREL’s National Wind Technology Center in Golden, Colorado and several test centers in China under the Chinese Academy of Sciences Institute for Electrical Engineering (dynamometer testing) and Institute of Engineering Thermophysics (blade testing), the China Electric Power Research Institute (field testing), the China General Certification Center (blade testing), and others. For blade testing internationally, there are only a few test centers capable of accommodating the new large blades under development for large capacity and offshore wind turbines. The Massachusetts Clean Energy Center Wind Technology Testing Center (WTTC) is operating a Large Blade Testing Facility, supported by the U.S. Department of Energy, capable of testing blades up to 90 meters. Representatives of this center are discussing collaboration with a new, large-blade testing center in Baoding under the China General Certification Center, including technical staff exchanges and implementation and interpretation of the IEC 614 0 0 - 2 3 international blade test standards.

  China Renewable Energy 23

China-U.S. Collaboration on Renewable Energy 4. CERTIFICATION

Currently for solar and wind technologies, the requirements of multiple testing and certification in different countries represent barriers to the global deployment of renewable energy, adding expense for manufacturers and project developers, and uncertainty for investors, insurers, and other stakeholders. In China the lack of mutual acceptance of test results and certifications between Chinese and other international testing and certification centers is one of the factors that affects both the export and import of renewable energy equipment. One effort to address lack of transferability of test and certification results is the IEC TC88 committee’s effort for harmonizing a number of wind turbine standards and conformity for testing and certification, including a broad range of interested stakeholders. The China General Certification Center is also playing a leading role in China to engage testing and certification centers in Europe and the United States to promote mutual acceptance of solar and wind testing results and certifications. The CGC has signed several agreements for this purpose with Intertek, TÜV Rheinland, UL, GH, DEWI-OCC and BV.

5. CONCLUSION

Collaboration under the U.S.-China Renewable Energy Partnership is one mechanism that is contributing to the overall framework for cooperation between China and the United States related to renewable energy standards, testing, and certification issues. Active cooperation is being facilitated between solar and wind standards experts and organizations, between test centers, and between certification organizations. The cooperation is also being conducted in principle within the framework of participation in international organizations. Standards, testing, and certification are components of a broader set of issues that impact renewable energy technology development and deployment, financing, and market development.

 24 China Renewable Energy

The China General Certification Center is aggressively reaching out to a broad stakeholder group of manufacturers, project developers, banks, financial institutions/investors, insurance companies, and others to encourage communication on standards and certification issues that impact the decision making process of these groups.

6. ACKNOWLEDGMENTS

We gratefully acknowledge Wan Lin, formerly at the China General Certification Center, for his leadership and support for the development of this China U.S. cooperation for standards, testing, and certification. We also acknowledge the support of Liang Ji at the Underwriters Laboratory for his support of these activities.The support of numerous colleagues in China and the United States is gratefully acknowledged, including but not limited to John Wohlgemuth, Peter Hacke, Keith Emery, Paul Veers, Ye Li, and Derek Berry at the National Renewable Energy Laboratory; and Zhengxin Liu, Rui Jia at the Chinese Academy of Sciences; and Shilin Fan, Chenggang Shi, Wenxin Li, and Kewei Liu at the China General Certification Center. The support of the National Energy Administration in China and the U.S. Department of Energy for general administration and oversight of the U.S.-China Renewable Energy Partnership is gratefully acknowledged. This paper was prepared and partially funded through the support of the U.S. Department of Energy under Contract No. DEAC36-08GO28308. REFERENCES (1) 2012 China Wind Power Industry Map, Chinese Wind Energy Association, 2013 (2) Global Market Outlook for Photovoltaics 20132017, European Photovoltaic Industry Association, 2013 (3) U.S. China Clean Energy Cooperation, U.S. Department of Energy, January 2011 (4) China’s Solar Future: A Recommended China PV Policy Roadmap 2.0, Semi PV Group, April 2011 (5) Proposal for a Guide for Quality Management Systems for PV Manufacturing: Supplemental Requirements to ISO 9001-2008, P. Norum, I. Sinicco, Y. Eguchi, S. Lokanath, W. Zhou, G. Brueggemann, A. Mikonowicz, m. Yamamichi, and S. Kurtz, NREL Technical Report, NREL/TP-5200-5799, May 2013

China-U.S. Collaboration on Renewable Energy

US-China Energy Cooperation Program (ECP) Supporting U.S. China Renewable Energy Partnership US-China Energy Cooperation Program (ECP)

The US-China Energy Cooperation Program(ECP) is the commercial implementing arm of US-China clean energy collaboration. Foundedin September 2009 by 24 US companies, ECP is the only private sector-led nongovernmental organization dedicated to clean energy business development, market expansion, foreign direct investment and job creation in both the United States and China. With official support of the USand Chinese governments, ECP’s public-private platform empowers member companies to becomepart of a total solution industry consortium to deliver transformative business development outcomes that require a collective and coordinated effort. US government agenciesDepartment of Commerce (DOC), Department of Energy (DOE) and the US Trade and Development Agency (USTDA) - together with Chinese government agenciesNational Energy Administration (NEA) and Ministry of Commerce (MOFCOM) signed bilateral Memorandums of Understanding in support of ECP. The five agencies serve as ECP’s official government advisers.

  China Renewable Energy 25

China-U.S. Collaboration on Renewable Energy developing communication interface standards for power distribution and consumption. The outcome will be a demonstration pilot for the new integrated communication model with the State Grid Corporation of China.

Smart Grid Automatic Demand Response Pilot Project

ECP members join ECP through different working groups (WGs) to work on different areas. And also through join different WGs, member companies can form industry value chains. Within each working group, members establish a sector development road mapfor the short-, medium- and long-term. Through this process, each working group identifies annualbusiness development objectives and concrete initiatives for implementation. The ECP Renewable Energy Working Group (REWG) and Smart Grid Working Group (SGWG) actively support the “U.S. China Renewable Energy Partnership” and have achieved the following outcomes

Establish New Industries and Markets Integrated Smart Grid Communication Model Study

With support from NEA and USTDA, SG WG launched in September 2012 the Integrated Smart Grid Communication Model Study with the China Electric Power Research Institute (CEPRI) and the State Grid Corporation of China. Led by SG WG co-chair Cisco, the study will review international smart grid communication standards and explore innovative approaches to establish a common system model for both the power grid and communication networks. It will focus on  26 China Renewable Energy

In a partnership with Tianjin Economic Technological Development Area (TEDA) and the China Electric Power Research Institute (CEPRI) and State Grid Corporation of China, SG WG co-chair Honeywell and member AECOM have implemented China’s first smart grid automatic demand response pilot project in Tianjin. With support from USTDA, DOE, DOC, NEA and NDRC, the project seeks to reduce electricity load, cost, and emissions and improve grid stability in commercial, industrial and government buildings while improving the stability of the power grid. The project was completed in November 2012.

Influence Regulatory Policy

Global Photovoltaic Grid Integration Standards Comparative Study

Together with the China Electricity Council (CEC) and China Electric Power Research Institute (CEPRI), RE WG led by UL is implementing a comparative study of photovoltaic (PV) grid integration standards in China, the United States and the European Union. The global comparison will assess industry and regulatory norms and compare technical issues, such as the utility permission procedure for PV power systems. Launched in September 2012, the study’s objectives are to serve as a reference for China’s development of policies, standards and utility permission procedures for PV power systems as well as to recommend potential international standards based on Chinese technical specifications.

US Wind Power Investment Manual

EFI WG co-chair Baker Botts and RE WG cochair UPC Renewables produce the “Manual on Wind Power Investment in the USA,” a

China-U.S. Collaboration on Renewable Energy bilingual guide for Chinese investors seeking to pursue wind power investment opportunities in the United States. With support from member Tang Energy and Chinese partner Longyuan Power Group, the guide features case studies of wind power investment projects in Texas and California by highlighting the regulatory process for investmentexecution. The manual was officially released at the Second USChina Renewable Energy Industry Forum held in Washington, DC, in September 2011 and is officially endorsed by the US Department of Energy and the Chinese National Energy Administration.

Wind Power Grid Integration Policy Exchange

At the invitation of the grid division of NEA’s Electric Power Department, the SG WG has provided policy briefings on global wind power grid connection and dispatch mechanisms and rules. Member companies led by UL, GE and FloDesign presented the findings, which will serve as a reference for NEA’s renewable energy grid integration policy development.

For 2013m the ECP REWG and SGWG 2013 Annual Business Development Objectives include:

US Wind Farm Operation Best Practices

Led by co-chair UPC Renewables with support from UL and GE, the RE WG is conducting a study of successful cases of wind farm operation and management in the United States. The study’s objectives are to introduce to Chinese industry stakeholders the key standards related to preliminary work of wind farm development, construction, operation and management as well as the standards of wind turbines and control systems. In addition, it analyzes the wind power industry development,market conditions and policies with a focus on wind power grid connection. The study was completed in November 2012.

1. Module stability and safety evaluation workshop 2. Provincial Trips to Yunnan, Xinjiang and Jiangsu triptry to engage provincial and local governments and Chinese companies to showcase memcos' technologies, products and solutions in renewable energy with the purpose of securing access to commercial projects. 3. Actively participate in U.S. China Coresearch Projects: o Sino-U.S. New Energy Investment and Financing Mechanism and Policy Innovation Study o New Energy Micro-gird/ Smart Grid Pilot Project o S i n o - U . S . Wi n d P o w e r, P V s o l a r (Development and Utilization), Water Heating Equipment Standard Comparison Study (Wind Power Standards) o Comparison of New Energy Integration Technology Standards between U.S. and China o N e w E n e r g y P o w e r O p e r a t i o n Management Training

  China Renewable Energy 27

Industry Insight

High RE scenarios for China in 2050 Research team of CNREC

China National Renewable Energy Centre (CNREC) has recently prepared comprehensive long-term scenarios for the Chinese energy system, using tools, developed in cooperation with experts from NREL, Denmark and Japan. The tools and methodologies developed is unique in a Chinese context and brings CNREC is front as leading think tank on renewable energy in China.

CREAM – the analytic platform

In 2011, the renewable energy experts within NDRCs Energy Research Institute had an on-going dialogue with experts at NREL regarding development of state-of-the-art simulation tools for short-term and long-term analyses of RE deployment in the Chinese energy system. When the Chinese National Renewable Energy Centre was established in early 2012 as part of the Energy Research Institute is was decided to develop such tools as part of CNRECs analytic platform. Today –one and a half year after the decision – China Renewable Energy Analyses Model (CREAM) is developed and used in CNRECs first 2050 scenario analyses. Experts from NREL and Denmark have assisted CNRECs expert in the development based on experiences from the use of the US-based REEDS model and the Danish Balmorel model. In addition, the Japanese Institute for Environmental Studies has support CNREC in the model development.

 28 China Renewable Energy

Industry Insight CREAM has four different sub-models, which are “soft-linked” though data ex-change between the individual models. The future development in the energy demand for the different sectors is calcu-lated in CREAMDEMAND – a spreadsheet based model for the industry sector the housing sector and the transport sector. The model determines the future energy demand based on the development in a number of main drivers such as population, GDP and energy-to-GDP ratio. The core model is the CREAM-EDO model for the electricity and district heating sector, which is a bottom-up mixed integer linear programming model, making least-cost optimisation of the dispatch of the power system, taking into account constraints from the transmission system, resource availability etc. The model is able to invest in new power plants and new transmission lines if it is technical and economical beneficial. The model is specially designed to take into account development and integration of renewable energy, but it comprises the whole energy system, including existing and possible new coal-fired power plants. The model is implemented on a provincial level, and it can give result for provinces, regions and for the Chinese power and heating system as such. The macro economic impact of the transformation of the future energy system is analysed by the CREAM-CGE model, which is an economic macro model. The results from CREAM-EDO model are used as input to CREAM-CGE and the output is the impact on GDP, job creation, the environmental impacts etc. for the whole Chinese society. The last model in the CREAM modelsuite is CREAM-TECH - a Levelized Cost of Energy model, able to a technology to technology comparison of lifetime cost and the competitiveness between RE technologies and fossil-fuel technologies.

Three scenarios for development of the energy system to 2050

In order to analyse different development paths and different end-goal for the 2050 system three scenarios have been defined with focus on the supply side development and supply side policy measures. The Reference scenario is the baseline scenario, illustrating a development where the 12th 5-year plan ambitions for the RE development is the driving force. The RE Max scenarioon the other hand illustrates how strong ambitions for RE development could lead to an energy system with drastic reduction of the use of fossil fuels and a high share of renewable energy in 2050. The main drivers in the scenario are ambitious CO2 caps and pollution reduction, stop for new coal-fired power plants after 2015, switch from fossil fuel to electricity in the transport and industry sectors, and introduction of market-based dispatch in the electricity sector. The third scenario, the Optimisation scenario, has more focus on economic measures and regulatory measures, i.e. the main drivers for the development in this scenario are carbon taxation, marketization of the power sector, and switch to electricity in other sectors.

Energy consumption

All scenarios assumed same economic, social development and energy service by 2050, by then the population being back to 1.3 billion, urbanization rate reaching 80% and GDP growing six timesthe 2010 level. The consumers and other have the same use of electric appliances as televisions etc., use the same area of heated (and cooled) floor space per inhabitant, drive the same number of kilometres by car etc. This level of consumption of energy services is set to be equal to that of developed countries as e.g. the European Union in 2050.

  China Renewable Energy 29

Industry Insight instead of fossil fuels.

Industry

The energy consumption in the Chinese industry sector, excluding the energy industry itself, constitutes more than 60% of the total final energy consumption today. It is assumed that the future development of the industry sector will lead to higher energy efficiency and also to a gradually change from heavy energy consuming industry to service industry and other industries with lower energy demand. As a result the energy demand in industry and GDP development will increasingly decouple. Increased use of renewable energy in the industry sector is a challenge. It is possible to use biomass instead of fossil fuels, but due to the limited resources of biomass it can only replace a minor share of the fossil fuel. In the calculations it has been assumed that smaller amounts of fossil fuels are replaced by bio energy, electricity, solar heat, heat pumps and district heating in the RE Max scenario and the Optimisation scenario.

Transport

Within transport, there is a large potential for more efficient use of energy, as electric cars are much more efficient than gasoline and diesel cars. In the RE Max scenario and the Optimization scenario, 80% of the cars are assumed to be elec-tric cars in 2050. Besides, large vehicles are assumed to use biofuels

Buildings

For the heating of buildings, it is possible to use solar heat and heat pumps in-stead of fossil fuels. In the RE Max scenarioand the Optimization scenario, it is assumed that all buildings in rural areas are supplied 100% by solar, heat pumps and / or biomass. This energy conversion will also promote prosperity and better living conditions in rural areas. In cities, solar heat and heat pumps will probably only be able to cover a smaller share of the heat demand, due to the limited outer space in the cities. On the other hand, use of district heating is a possibility in the cities in the Northern part of China. In the RE Max scenarioand the Optimization scenario, it has been assumed that 20% of the consumption of fossil fuels is replaced by solar heating and 20% is replaced by heat pumps. It would be possible also to use some more district heating for these buildings, and this could be investigated further in the second phase of the study. According to preliminary caculation, The total energy consumption on an energy basis1 in 2050

Figure 1: energy consumption in traffic and building heating

Energy consumption for heating of buildings, million MWh

Energy consumption for transport, million MWh 6000

Electricity

5000

5000

Geothermal heat etc.

4000

4000 3000 2000

Electricity

3000

Biofuel

2000

Gasoline and diesel

1000 0 2010

Reference RE Max 2050 2050

 30 China Renewable Energy

Solar heat Biomass District heating

1000

Natural gas

0 2010

Reference 2050

RE Max 2050

Oil Coal

Industry Insight is 40,983 TWh in the Reference scenario, 38,691 TWh in the Optimi-sation scenario and 36,866 TWh in the RE Max scenario. The lower energy con-sumption in the Optimisation and the RE Max scenarios is caused by the higher share of wind power and solar power, which have no conversion losses from fuel to electricity. The electricity consumption in 2050 is 10,463 TWh in the Reference Scenario, 13,743 TWh in the Optimisation scenario, and 13,800 TWh in the RE Max scenario.

the current energy system. In 2010, the primary consumption of fossil fuels in China was 24,000 million MWh. In the Reference scenario in 2050, the consumption is expected to increase to 33,000 million MWh. In the RE Max scenario, the consumption of fossil fuels is reduced to 16,000 million MWh in 2050, or less than half of the amount in the Reference scenario. As the renewable energy sources used in the RE Max scenario are domestic resources, this scenario improves the security of supply.

The shareof renewable energy and security of supply

Electricity and district heating

The figure below shows the energy sources in primary energy demand in 2010 and in 2050 in the RE Max scenario.

In 2010, the share of renewable energy was about 9%2. In the RE Max scenario, the share of renewable energy grows to 56% in 2050, and the share of non-fossil fuels (renewable energy and nuclear energy) grows to 69%. In the Optimization scenario, the share of renewable energy grows to 48% in 2050. In the scenarios with high share of RE the fuel consumption is much more diversified than in

As in other countries, renewable energy is mainly used for electricity production. Wind power and solar power are of course directly for use in the power sector, but also biomass resources (mostly biogas) are suitable for electricity production – typically in combination with district heating. In all scenarios hydropower and wind power are the main RE resources. Hydro-power is economically very attractive, but the potential for further development of the hydropower is limited. Therefore the high or extreme high level development is assumed in all three scenarios. Wind power has a high potential and the development of the resource is steady

figure2: The energy sources in primary energy demand in 2010 and in 2050 in the RE Max scenario

1

Not converted to coal equivalents, see next note. 2

In this summary the RE share is calculated using the standard Chinese methodology, the coal equivalent calculation. In this calculation electricity produced without the use of fuels is converted to the equivalent amount of coal, which would have been consumed for electricity production if the electricity had been produced at a coal-fired power plant with average efficiency.

  China Renewable Energy 31

Industry Insight Figure 3: installed capacity of all kinds of renewable energy under various scenarios

growing throughout the period to 2050, most in the RE Max scenarios where around 2800 GW is installed in 2050. Solar power has also a huge resource potential. The investment cost and the low number of utilisation hours imply that solar power currently is one of the more expensive RE technologies. In the study, it is assumed that the rapid cost reduction for solar PV will continue although not in the same pace as the last 10 years. The cost reduction and the higher CO2 reduction requirements in the RE Max and the Optimisation scenarios allow for considerable investments in solar power by the end of the period. In the RE Max scenario 1000 GW is installed in 2050. Until then the solar power deployment is more limited in all scenarios.

Balancing and curtailment

 32 China Renewable Energy

The high amount of wind and solar in the RE Max scenario gives a special chal-lenge in matching the electricity production with the demand. In the study the balancing of the electricity system has been examined in detail, looking at an hourly dispatch of all power plants, taking into consideration limitations in the system, including the need for district heating. The hourly dispatch for one week in 2050 is illustrated in the figure 4. The simulation shows that it is possible to balance the system, even with a very high share of renewables. It requires however a much more flexible dispatch of the power plants and interconnectors as well as investments in new transmission capacity.

Transmission

A strong transmission system is necessary to optimise the use of the available energy resources in China. In all three scenario the transmission grid is expanded and the flow between the

Industry Insight Figure 4: Operation of the power system during a spring week. In the RE Max scenario, thermal power and hydropower are adjusted in order to integrate the large amounts of wind and solar power.

regions increases. Figure 5 illustrated the expansion and the flows in the RE Max scenario in 2050. The annualised transmission investment in 2050 in the RE Max scenario is around 500 billion Yuan per year, app. 6% of the total annualised cost in the power sector.

The environment

CO2 emissions are reduced substantially in both the RE Max scenario and the Optimization scenario, compared to the Reference scenario. This is because of the high share of renewable energy. CO 2 emissions are also reduced compared to today’s emissions, because of the high share of renewable energy in the RE Max scenario and because of an increased use of nuclear energy in all of the scenarios, compared to today. Emissions of SO2, NOx and particles affect the

local environment. Increased use of solar, wind, hydropower and geothermal resources will reduce these emissions in the long run. There are also alternatives available for short term reductions of these emissions: flue gas cleaning, use of natural gas instead of coal and oil, increased use of district heating (in combination with flue gas cleaning at district heating plants) and use of catalysts etc. in transport.

Direct costs

In the Reference scenario, the total energy costs grow from 4,600 billion CNY in 2010 to 11,000 billion CNY in 2050. The RE Max scenario ends up by being the most expensive, as the 2050 costs are 12,000 billion CNY, while the Optimization scenario turns out to cost 11,700 CNY in 2050. These costs comprise fuel costs, costs of investments in energy plants and transmission networks and O&M of these plants

  China Renewable Energy 33

Industry Insight

Figure 5: the grid capacity expansion and power flow

Added capacity (GW) Between regions and within regions

Export and flow (TWh) By regions and between regions

3.410

573

21 7

213

144

- 284

Macroeconomic effects

For the macroeconomic effects of the transition of the energy system the CNREC’s CREAM CGE model has been used to compare the RE Max scenario with the Reference scenario. In the RE Max scenario, the total value added in the RE sectors (Biomass, Solar, Wind, Hydro) is 6.1 trillion Yuan, contributing to 2.6% of GDP in 2050 in China. If Nuclear is included, the total contribution of non-fossil energy industry to GDP is 3.1%. The development of RE industry also increased the economic output of related industries in the whole economy structure in China. The CREAM CGE model esti-mated 6 trillion Yuan output is increased in other main industries (e.g. Service, R&D, Transport, Construction etc.) in 2050. 5.6  34 China Renewable Energy

569 48 1

-774

-478

1

and networks. The costs estimates are rather uncertain, as it is diffi-cult to predict future energy prices. The costs presented here are based on oil and natural gas costs from IEA and Chinese domestic costs of coal and bio energy.

5

7 97

19 1 .5

297

87

1 52

572

1.158

47

827 256

1.252

977

49 3

154

189

-1.711

4

million more jobs are created in these sectors because of RE development comparing to the reference scenario.

Next steps

The fast-track scenario analysis with its preliminary results is a warm up for CNREC to do more comprehensive scenario studies together with a number of Chinese key stakeholders and institutions. This study will go more into detail regarding assumptions and possibilities for the development of renewable energy than it has been possible within the short time frame of the current scenario study. The fast-track study does however demonstrate that CNREC is capable of carrying though state-of-the-art energy system analyses, which can contribute to policy decisions with huge impact for the future deployment of renewable energy in China. CNRECs CREAM tool will also be an important part of CNRECs future cooperation with international renewable energy experts, reinforcing the existing cooperation with the US and leading renewable energy frontrunners in Europe.

Industry Insight

Current Status of PV in China Wang Sicheng, Researcher of Energy Research Institute of NDRC

1. Background and Policies

China is facing serious pressure on energy supply and GHG emission. China is the largest country in GHG emission since 2007, China is the largest producer and user of electricity, China is the largest importer of coal, and the dependence of imported oil is as high as 56%. China has to do efforts to alleviate the problems. Renewable energy (RE) development is the basic strategy in China for energy sustainability and GHG reduction. Solar PV will play a key role in renewable energy development in China. The China RE Law was effect on 1st Jan., 2006 to support RE and updated in 2009. Based on RE Law, there are two funds can be used to support RE. One of the fund is the RE Surcharge collected from all end users of electricity at the rate of 0.8 cents/kWh and about 20-25 billion Yuan will be collected each year, the other is Special RE Fund directly controlled by Ministry of Finance. Currently, RE Surcharge is used to support ground-mounted LS-PV through the way of Feed-In Tariff (FIT) and the Special RE Fund is used to support government sponsored projects: PV Building Project and Golden-Sun Demonstration. The status of government supported projects is listed bellow:

  China Renewable Energy 35

Industry Insight Table 1-1 Government Sponsored PV Projects Large Scale PV Phases

Approved Capacity

Feed-in Tariffa

First Bidding 2009

2 projicts, 20MW

FIT = 1.0928 yuan/kWh

Second Bidding 2010

13 projects, 280MW

FIT = 0.7288-0.9907 yuan/kWh

2011 FIT

2000 MW

FIT = 1.15 yuan/kWh

2012 FIT

2000MW

FIT = 1.0 yuan/kWh

Total (till 2012)

4300MW

Financial Source

Surcharge for Renewable Energy PV Building Project

Phases

Approved Capacity

Subsidy to Capital (yuan/W)

1st phase, 2009

111 projects, 91MW

BIPV 20, BAPV 15

2nd Phase, 2010

99 projects, 90.2MW

BIPV 17, BAPV 13

3rd Phase, 2011

106 projects, 120MW

BIPV 12 yuan/W

4th Phase, 2012

250MW

BIPV 9, BAPV 7.5

Total (till 2012)

About 550MW

Financial Source

Special Fund for Renewable Energy Gonden Sun Demonstration

Phases

Approved Capacity

Subsidy to Capital (yuan/W)

1st Phase 2009

98 projects, 201MW

PV Building 14.5, off-grid 20

2nd Phase 2010

50 projects, 272MW

PV Building 11.5, off-grid 16

3rd Phase 2011

140 projects, 690MW

C-Si 9.0, a-Si 8.5

4th Phase 2012

167 projects, 1709MW

PV Building 5.5, off-grid>7.0

Total (till 2012)

2870MW

Financial Source

Special Fund for Renewable Energy PV Building Project and Golden-Sun Demonstration

Nov. 2012

2830MW

Financial Source

BIPV 7, BAPV 5.5

Special Fund for Renewable Energy Total Installed and Approved PV by the end of 2012 10550MW

On Dec. 19th, 2012, Premier Wen Jiabao chaired the meeting of State Council to approve 5 approaches to support solar PV: (1) To push forward shakeout and recombination of PV industry by market force (to overcome the problem of over-capacity in PV industry in China); (2) Government PV market development plan should be agreed with the plan of Grid Company (to avoid the problem of delay of grid-connection and cut-off PV power plants from grid for safety);

 36 China Renewable Energy

(3) Expanding domestic PV market and focus on distributed PV (to change the situation of highly dependent on foreign market and encourage distributed PV instead of LS-PV ); (4) To set up solar resources based Feed-in Tariffs of PV and to stop capital subsidy and move to performance based tariff subsidy (originally, only one PV FIT for whole China and capital subsidy for PV Building project and Golden-Sun Demo.); (5) To follow the market mechanisms, reduce government interfere and prohibit local

Industry Insight protections (to setup health market for PV in China).

kWh will be provided in addition;

To response the strategy of State Council, in March, 2013, the draft for comments of Feed-in Tariff (FIT) of PV based on regional solar resources and the draft subsidy policy for distribution PV were issued by NDRC. The main issues of the policy are as follows:

(4) The contract period is 20 years. Table 1-2 The Draft Version of PV FIT and Subsidy for Distribution PV Classification of Solar Resources

(1) 4 levels of FIT based on solar resources: 0.75, 0.85, 0.95, 1.0 Yuan/kWh; (2) For self consumed PV electricity: 0.35 Yuan/kWh of subsidy will be provided; (3) The excess PV electricity feed-back to grid will be purchased by grid company and the subsidy of 0.35 Yuan/

LS-PV

Distributed PV

FIT

Real Income for Self- Subsidy for onsumed PV Feed to Grid

(Yuan/kWh)

I

0.75

II

0.85

III

0.95

VI

1

(Yuan/kWh)

(Yuan/kWh)

Retail grid price + 0.35

Whole sell price + 0.35

2. National Plan for PV till 2020

In 2012, National Energy Administration (NEA) released the 12th 5-Year Plan (2011-2015) for Solar Power Generation. The updated target of cumulative solar power installation for 2015 and 2020is listed bellow:

3. Research and Development (R&D)

Ministry of Science and Technology (MOST), the government unit to be in charge of R&D of PV. Average annual investment for R&D from MOST is about 500 million Yuan and the supported fields cover all manufacture chain: poly-Si, wafer, solar cells, PV modules, thin-film technology, CPV, energy storage, BOS components and system engineering.

Table 2-1 Government Target for Solar Power (2015, 2020)

Fig. 2-1 Solar Power Target and Annual Progress Forecast

Targets for Cumulative Installation of Solar Power (GW) 2015

2020

120.00

Rural Electrification

0.102

3.0

10.0

100.00

Communication and Industry

0.058

1.0

4.0

PV Buildings

2.390

LS-PV and Others

PV products

0.058

Large Scale PV (LS-PV) Total

Share of Distributed PV (%)

15.0 1.0

PV Ins.（GW ）

Distributed PV

Annual Ins. (GW)

2012

Market Sectors

42.0 4.0

15.0

40.0

7.0

35.0

100.0

36.4

54.3

100.00 85.00

80.00

71.00 59.00

60.00

47.00 35.00

40.00 20.00

4.392

Cumulative (GW)

0.00

3.50

7.00

23.00 13.00 10.00 12.00

2.70

3.50

6.00

2011

2012

2013

2014

12.00

2015

2016

12.00

12.00

2017

2018

15.00

14.00

2019

2020

Year

56.0

Table 2-2 Solar Power Target and Annual Progress Forecast Year

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Annual Inst.(GW)

2.7

3.5

6.0

10.0

12.0

12.0

12.0

12.0

14.0

15.0

Cumuli. Inst. (GW)

3.5

7.0

13.0

23.0

35.0

47.0

59.0

71.0

85.0

100.0

  China Renewable Energy 37

Industry Insight

Fig.3-1 Hydro-PV Micro-Grid Demonstration Project in Qinghai Province

Table 3-1 Current R&D Progress in PV R&D at both Laboratory level and Industry Level Poly-Silicon Industry Level

BOS and PV Systems

Hydrogen Reduction

60kWh/kg

Total Capacity

3GW/Year

Total Power Consumption

120kWh/kg

Types

Off-grid, centralized, string inverter, microinverter

By-producs Recycling

100%

Power Range

100W-1MW

Capacity/Factory

1000-60000 Ton/Year

Lead-Acid

Industrialized

Total Capacity

100000 Ton/Year

Lithium Battery

Industrialized

Cost

15-20 USD/kg

Vanadium Redox Battery

Industrialized

Na-S Battery

No

Flywheel

No

Inverters

Efficiency of solar Cells

Energy Storage

PV Cells

Laboratory (%)

Industry (%)

Mono-Si

20.40

19.0

Super-Capacitor

Industrialized

Poly-Si

18.00

17.0

Pumped Storage

Industrialized

D-Junction a-Si

9.20

8.0

Compressed Air Storage

No

u-Si/a-Si M-Junction

11.80

10.0

Off-grid PV

Mature

GaAs

29.25

No

LS-PV

Mature

CIGS

14.30

12.0

PV Buildings

Mature

CdTe

13.38

11.0

Sun Trackers

Mature

DSC

7.40

No

Micro-Grid

Demonstration

HIT

17.27

No

PV Products

Mature

Back-Contact

No

No

Monitoring Sys.

Mature

PV Systems

4. PV Industry Development

China has been the largest producer of PV modules in the world since 2007. In 2012, total PV module produced is about 23GW, little bit higher than 2011 (21GW). Even though, China is the largest producer in poly-Si in the world, but still needs to import at least 80,000 Ton from other countries, shared about 55%. The situation of PV industry in China is shown bellow: Table 4-1. Poly-Silicon Production in 2012 Country

US

EU

Japan

Korea

China

Other

Total

Production (Ton)

60000

50000

13000

45000

65000

7000

240000

 38 China Renewable Energy

Industry Insight Table 4-2 Domestic Production of Poly-Si and Share of Imported Poly-Si Year

2006

2007

2008

2009

2009

2011

2012

Production (Ton)

300

1100

4729

20357

45000

85000

65000

Demand (Ton)

4000

10000

25000

40000

89000

145000

145000

Shortage (Ton)

3700

8900

20271

19643

44000

60000

80000

Share of Import (%)

92.5

89

81.1

49.1

49.4

41.4

55.2

Table 4-3 PV Module Production in China (2011, 2012) No.

Company

2011

2012

1

Yingli Green Energy

1684

2359

2

Trina Solar

1510

1674

3

Suntech Power

2010

1665

4

Canadian Solar

1386

1620

5

JA Solar

820

985

6

Jinko Solar

792

924

7

Hareon Solar

855

900

8

Hanwha SolarOne

938

872

9

LDK(11')Renesolar(12')

880

748

10

Tianwei New Energy

964

700

11

Others

9161

10553

21000

23000

Total

5. PV Market Development

In 2012, total domestic PV installation is about 3.5GW, much less than original expectation (4.5 - 5.0 GW) due to the delay of subsidy payment and difficult in grid connection. The PV installation in China is listed bellow: In 2012, the management duty of RE surcharge was moved from Grid Co. to Ministry of Finance (MOF) and MOF will fill the gap of subsidy in case the RE surcharge is not enough. In this case, the problem of shortage of RE surcharge and the delay of payment will be never happened anymore. Another barrier is grid connection, especially for LS-PV, due to poor locally load consumption and poor grid transmission ability. In 2012, even

Table 5-1 Domestic PV Installation by Sectors 2012 2012 Domestic PV Market by Sectors No.

Market Sector

Annu. Ins.

Share

Cumm. Ins.

Share

(MWp)

(%)

(MWp)

(%)

1

Rural Electrification

20

0.57

102.5

1.5

2

Comm.& Indus.

10

0.29

58.0

0.8

3

PV Products

10

0.29

57.5

0.8

4

Building PV

1460

41.71

2390.0

34.1

5

Ground Mounted LS-PV

2000

57.14

4392.0

62.7

3500

100.00

7000.0

100.0

Total

Table 5-2 Price Reduction of PV During Last 6 Years Year

2007

2008

2009

2010

2011

2012

Cumulative Installation (GWp)

0.10

0.14

0.30

0.80

3.30

7.00

Module Price (Yuan/Wp)

36.0

30.0

19.0

13.0

9.0

4.5

System Price (Yuan/Wp)

60.0

50.0

35.0

25.0

17.5

10.0

Reasonable Tariff of PV (Yuan/kWh)

3.20

3.00

2.50

2.00

1.15

1.00

  China Renewable Energy 39

Industry Insight though the total installed capacity of LS-PV is 2GW, still about 800MW are waiting for grid-connection. During last 6 years the cost of PV has been reduced sharply, and people believe that PV will reach grid parity at user side or peak power by the year of 2015 and reach to grid parity at generation side by the year of 2020. It is expected that in 2013, domestic PV installation in China will be 5-8GW.

6. PV Roles Today and Future Forecast

Today, PV is not the main role in power supply in China. The situation of power supply in 2012 is listed in the following Table. The PV installation target for the year 2020, 2030 and 2050 is as bellow: And the role of PV in power supply by the year 2050 is shown in Table 6-3:

Table 6-1 Power Supply in China in 2012 2012 Type

Inst. Cap.

Generation

Share of Capacity

Share of Generation

GW

TWh

%

%

Hydro

248.90

821.37

21.56

18.03

Wind

60.83

121.66

5.27

2.67

PV

7.00

9.80

0.61

0.22

Biomass Power

6.00

24.00

0.52

0.53

Nuclear

12.57

94.28

1.09

2.07

Subtotal

335.30

1071.11

29.04

23.51

Coal

758.11

3259.87

65.67

71.55

Gas

38.27

133.95

3.31

2.94

Others

22.79

91.16

1.97

2.00

Subtotal

819.17

3484.98

70.96

76.49

Total

100.00

100.00

1154.47

4556.09

Non-fossil Power %

29.04

23.51

Renewable Power %

27.95

21.44

Solar PV %

0.61

0.22

Table 6-2 PV Market Forecast for the year 2020, 2030 and 2050 Year

2012

2020

2030

2050

Basic Target (GW)

7.00

100.0

300.0

1000.0

High Target (GW)

7.00

200.0

600.0

2000.0

The high target require high efforts on Grid-strengthen and storage tech.

Table 6-3 PV Role in Power Supply in China by 2050 Power Source

Power Capacity GW) Annual Equ. Working Hours (Hrs/Year) Production (TWh) Share of Capacity (%) Share of Production(%)

Hydro Power

400

3300

1320

10.22

11.00

Wind Power

1000

2000

2000

25.56

16.66

PV

1000

1400

1400

25.56

11.67

Nuclear

300

7500

2250

7.67

18.75

Biomass Power

200

4000

800

5.11

6.67

Gas Power

150

3500

525

3.83

4.37

Coal Fire Power

862

4300

3707

22.03

30.88

Total

3912

12001.6

100.00

100.00

 40 China Renewable Energy

Industry Insight

Progress and Challenge of New Energy Demonstration City Hu Runqing, CNREC

1 Background

City is the major area of energy consumption and the major area for social and economical activities, at the same times, most final energy consumptions are also concentrated in city. According to IEA data, city energy consumption account for 60% of the global energy consumption, building and industry sector account for 60% total energy consumption of the city, traffic for 30%. The energy usage per capita in urban area is twice as that in rural, urban energy consumption per capita is about 3.5 times as rural population, the increase trend in city population need more energy. It’s necessary to strength the energy saving and reduce energy consumption, support new and renewable energy development for social and economic development and achievement of the energy consumption control. City energy supply heavily relies on fossil fuel. Energy demands include electricity, heating and fuel. Utilization field cover industry, building and transportation. Pollutant caused by coal in urban air pollution in China, it is estimated that 70% of the dust emission, 90% of sulphur dioxide emission, 67% of nitrogen oxide emission and 70% carbon dioxide emission are caused by coal. The utilization of renewable energy can substitute for fossil energy and reduces the environmental pollution from energy consumption.

  China Renewable Energy 41

Industry Insight New energy can play important roles on substitution for fossil energy in cities. City development takes many chances for renewable energy in urban region. But, the city energy system, including energy resource, production facility, supply network and consumption model mainly rely on the fossil fuel. New energy has characteristic of sustainable use, and nature of environmental protection, however, compare with fossil fuel, there are some consistency disadvantage in perspective of pipeline, construction standard and infrastructure construction. So the promotion of renewable energy utilization need more support from government policy. The purpose of New Energy Demonstration City is to promote the substitution of renewable energy in urban. Chinese government already establishes some policy mechanism for renewable energy, e.g. FIT, subsidiary, fiscal incentive. Most of these policies encourage manufacture side, however, there are no support for consumer side.

2 Working concept

The main objective of the New energy city are taking full advantage of new energy in city area, including solar, wind, geothermal, biomass and others , in order that higher rate of renewable energy in energy consumption or more utilization in city will be reached. There will be 100 New Energy Demonstration Cities and 1000 New Energy Demonstration Zone by 2015 according to China Renewable Energy Development Twelve-Five Year Plan. The New Energy City’s target is to increasing the new energy utilization rate, reduce fossil fuel consumption, promote renewable energy development energy saving and mitigation goal. New Energy City is one of important activity in China energy development strategy. New Energy Demonstration city guiding ideology are: fully implement the scientific

 42 China Renewable Energy

concept of development, to optimize energy structure, the establishment of modern energy system as target, in accordance with clean efficient , complementary, distribution utilization, integrated and coordinated principle , actively explore new energy technology utilization in electricity, heating and building saving in urban, increase the rate of new energy in energy consumption, strength the sustainable development in city area. The activities of New Energy Demonstration Construction are to promote new energy technology improvement and application, and establish new management system and policy mechanism in cities. The activities will focus on solar thermal, solar PV, wind, biomass fuel, municipal waste utilization, geothermal, surface water utilization, new energy car and so on. The New Energy Demonstration City application body can be: cities in county level (excluded Green County). Vice provincial level large city could chose one region with great potential of renewable energy utilization to apply for New Energy Demonstration Zone. Provincial government is responsible for review the applications.

3 General condition and assessment criteria 1) General Condition

The city has right to apply for national New Energy Demonstration City construction if the city meet two following requirements, 1) reach the general conditions in energy conservation, environment, pollution, 2) rate of new energy in energy consumption is higher than 3% , or new energy consumption is more than 10 thousand tce.

2) Assessment criteria

New energy demonstration city assessment criteria include three kind criteria, total new energy utilization amount, technology utilization level, management and supportive mechanism.

Industry Insight These criteria evaluate the target of city in 2015.

and criteria development.

•

New energy utilization: more than 6% of the new energy consumption in energy consumption.

•

Technology utilization level: Classification criteria of each technology utilization level are set, including solar thermal, PV, wind, biomass, geothermal and other. At least two type of technology should meet the request.

•

Management and incentive mechanism: including local support policy, public service platform, support facility and promotion.

NEA officially promulgated the inception of new energy demonstration city work on 25th May 2012, and also the inception of new energy demonstration city and demonstration industrial zone application work. The official document clearly state the guiding and working structure of New Energy Demonstration City, the requirement and assessment criteria of application of the New Energy City. New Energy Demonstration City Planning need to get approval from local Provincial Energy Administration and then will be submitted to NEA. NEA will organize an expert team to review city’s planning and select qualified cities.

4 Progress

NEA already approved that three cities, Tulufan city in Xinjiang, Dezhou city in Shandong, Dunhuang city in Gansu, began their constructions on New Energy City before NEA formal launched New Energy Demonstration City. NEA hopes that these three cities’ experience will be helpful for the concept design

NEA modified management mechanism on Feb 201, give the administration authority to provincial government. NEA is responsible for formation of assessment criteria, planning guiding, evaluation and acceptance management. Provincial energy department is responsible for city initial assessment, and then make

Table 1 New Energy City Assessment Criteria Assessment index 1. 1.1 General capacity

1.2 New energy utilization 2. Assessment criteria 2.1 Total utilization 2.2 Technology criteria 1) Solar thermal 2) Solar PV 3)Distributed wind 4) Biomass 5) Geothermal 6) Others 3.Management and incentive mechanism

Assessment Requirement General condition Cutting tasks base on the national, provincial and municipal government’s pollutant. Energy consumption in the industrial added value above the designated size is less than the provincial average, or " Eleventh-Five " Above - scale units during the fall was greater than the provincial average energy consumption of added value declines New architecture must meet the energy building saving requirement General City environment comprehensive assessment should not lower than average grade in local province. Must meet one of two: New energy consumption account for higher than 3% of energy consumption New energy annual utilization is higher than 10 thousand tce New energy consumption account for higher than 6% of energy consumption Must meet one of two: Accumulative solar heat collector ≥1 million m2 Solar heat collector per capita≥0.36 m2 Total installed capacity≥20MW Total capacity ≥100MW Total utilization amount≥100 thousand tce Scientific and reasonable biomass, sludge utilization program large scale geothermal heating, building area of heat pump system ≥3 million m2 Other new energy utilization ≥50 thousand tce Local government support Public service platform Support facility Promotion

  China Renewable Energy 43

Industry Insight the short list of applicant. Municipal energy authority is responsible for project organization and implementation. NEA also divided 100 demonstration cities quota into each province. NEA also encouraged the qualified city or interested city to apply for new energy demonstration zone. NEA already received application and their new energy demonstration city development planning from more than 50 cities and 6 industrial zones so far and conducted the expert evaluation for 12 cities.

5 Challenge

City development concept need be changed

There are a lot of cities put forward “ New Energy City “ development goal in recent year, however, most of them only focus on the new energy manufacture and large scale new energy plant in order to attract new investment and to increase Local GDP. New energy city concentrates on green energy consumption in local area and alternate fossil energy and scale up the new energy utilization in new energy city.

How to select appropriate technology and application mechanism?

There are a lot of differences for each new energy technology in their technology mature, economy, and a lot of difference of their resources and application conditions in different regions. How to select appropriate technology and application mechanism is a big challenge for demonstration cities and local developers. Especially new complementary system’s applications are big challenge. In recent year, the complementary system, including new energy/ new energy system and new energy/fossil energy system, developed very quickly. These systems have improved efficiency and stability of renewable energy system, and can meet the high level energy demand in the city. There are great potential exist, however the developer capacity is very weak now.

 44 China Renewable Energy

Planning and implementation

How to make applicable action plan in New Energy Demonstration City is also a great challenge. Some of cities set up a big target and want to develop all kinds of new energy which is not suitable for local conditions. In addition, there are a few of city’s planning being divorced from reality; they set up their big target just because the criteria asked. It’s quite difficult to achieve goal in current policy status.

Data collection and verification

There are some shortage about basic data source involve energy consumption, new energy production and consumption in city and in region level. The data comes from different resource and it’s difficult to coordinate these data. In the official statistical book, the data bout electricity is easy to get, but the data about heating and fuel are more difficult to check. No official statistical method and shortage of detailed basic data sources, assessment criteria inspection would be more difficult in real work.

No incentive policy support.

Central government haven’t release any incentive policy for new energy demonstration city, local government really expect the promulgation about support policy form central government. Incentive policy is still under research and discussion currently. The policy framework and detail measures are not clear now. The following issues are considered during the policy research: 1) incentive policy will not suitable for those projects which have got the incentive policy already, for example renewable energy electricity with FIT; 2) incentive policy need to applicable in real work; 3) encourage local government and stakeholder’s initiative. The inventive policy may be considered include: 1) new energy consumption are not in the list of energy consumption control; 2) the projects in new energy demonstration city will have a priority to get project approval; 3)subsidy for some technology investment; 4)subsidy for new energy consumption.

Industry Insight

Challenges and Suggestions for the development of China’s Wind Power Industry Qin Haiyan, Secretary General of Chinese Wind Energy Association

After rapid development for several years, the development of Chinese wind power industry slowed down obviously in recent 2 years. At the same time, more problems began to emerge in the industry. Problems such as the huge loss caused by wind power curtailment, disorder of equipment competition, lack of independent innovation and block of international market cannot be ignored any more.

  China Renewable Energy 45

Industry Insight 1.Status of Wind Power Industry in China

Since Renewable Energy Law of People's Republic of China was implemented officially in 2005, with the help of policy and market, wind power industry in China has developed rapidly. The newly installed capacity doubled the original capacity from 2005 to 2010, and the accumulated installed capacity kept the first in the world from 2010-2012. In 2012, China invested 67.7 billion USD to renewable energy, 40% of which was invested to wind power, which is 27.2 billion USD. The newly installed capacity in 2012 was 12.96 GW, the accumulated installed capacity was 75.32 GW, and the accumulated grid-integrated capacity reached 62.3 GW. The generation of wind power reached 100.4 TWh, wind power took place of nuclear to be the third electricity resource in China. Chinese wind power has made outstanding achievements during just a few years. An industrial system which contains wind farm development, equipment manufacture, technology research, testing & certification, and related services has already been formed. With the drive of market, the scale of wind power enterprises in China expanded rapidly and wind power equipment manufacturing technologies were strengthened clearly. Large scale WTGS technology and core technology of key components took breakthrough. Great progress was made in innovation on specific WTGS for specific climate characteristic and lots of kind of WTGS which are suitable for sophisticated environment characteristic, such as cold temperature, offshore, typhoon, continental plateau and low wind speed were designed and produced. Due to the large scale of development, the construction cost of wind power is controlled effectively, and cost gap between wind power and conventional power is further narrowed. The competitive advantage of market is cultivated. In the meantime, with the development of whole industry, a group of highly educated, high level and international technical personnel has initially formed. They contributed intelligent support  46 China Renewable Energy

to the sustainable development of wind power. Now, the annual output value of wind power industry in China reaches 100 billion. And more than 300,000 jobs are created by wind power directly and indirectly. More than 86 million tons of carbon dioxide emission was reduced. The rapid development of Chinese wind power contributed a lot to slowing global warming, reducing pollution emission, adjusting energy structure and promoting employment. After rapid development for several years, the development of Chinese wind power industry slowed down obviously in recent 2 years. In 2011, the newly installed capacity of wind power began to grow negatively, dropped 6.9% compared to 2010. The newly installed capacity of 2012 dropped 26.5% compared to that of 2011. At the same time, more problems began to emerge in the industry. Problems such as the huge loss caused by wind power curtailment, disorder of equipment competition, lack of independent innovation and block of international market cannot be ignored any more.

2. Main challenges and suggestions 2.1 Taking different measures to solve the wind power curtailment

Wind power generation loss caused by grid dispatching has already become the largest obstruction of the healthy and sustainable development of Chinese wind power industry. According to the statistic of National Energy Administration (NEA), PRC, in 2012, about 20 TWh wind power generation was lost due to restriction, which is about 2 times of that in 2011. And the generation loss converted into more than 6,500,000 tons of standard coal. The direct loss of electricity charge amounted to 10 billion Yuan. Recently, the NEA released a series of policies to speed up wind power grid integration and consumption to guide the wind power development in different regions of China. But from the perspective of whole industry, to

Industry Insight improve the efficiency of wind power exploration and eliminate wind power curtailment, we should solve this problem from different levels. First of all, we should improve the local wind power consumption ability. Through the marketoriented transform of electricity system, energysaving dispatch management and full purchase of renewable energy generation would be fully carried out. Currently, the integration of more wind power into the grid is an economic problem, not a technical problem, key of which is how to coordinate interest of different parties. Secondly, we should strengthen the transport capacity of cross the districts and expand wind power consumption regions to different districts. Thirdly, at the same time of constructing flexible peak power pack, we should improve the initiatives of conventional power to participate in power peaking, make the existing thermal power generation participate in power peaking through the establishment of auxiliary service market and benefit compensation mechanism. Lastly, we should plan and coordinate the construction of grid, wind power and other generation. Treat wind power as an important power source at present and leading power source in the future.

driven force to improve technology and quality of wind power equipments, which is not good for the long term development of the enterprises.

2.2 Guiding the healthy development of wind power equipment market

2.3 Improving the system construction to promote standard development of industry

As wind power capacity in China is expanding, the competition among manufactures is fiercer and fiercer; the irrational price competition among enterprises is more and more normal. On one hand, the long term price competition in equipment market makes the manufactures sacrifice quality for the lower price, which makes the quality of products terrible. More importantly, the low price leads to the profit of manufactures decrease by a large margin, which affects the technical input of manufactures and restricts progress of technology directly. On the other hand, the local governments trade the resource for the industry, which forces the wind farm developers to purchase the WTGS produced by local manufactures. And in this unfair competition environment, some less efficient manufactures survives. They don’t have any

Faced with these problems, the government should play a leading role to improve the mechanism of market. Improper administrative interventions should be completely eradicated to create a free, equal and fair market environment. First of all, the government should use the wind power industry monitoring and evaluation system to disclosure the quality of wind power equipment regularly, to provide a transparent trade environment for supply and requisitioning parties. Secondly, the tenders of wind power should change the present evaluation principlesthe lower, the better. Not only price but also the quality, usability & reliability of product and after-sale service should be taken into account when purchasing equipments. Moreover, the manufactures should focus on improving quality and building after-sale service system to seize the market; pay more attention on technology innovation, personnel storage and manufacture improvement to enhance market competitiveness comprehensively.

Since 2009, statistic shows that there are more than 30 grave accidents nationwide. More than 30 WTGS collapsed or were burned. The loss was huge and caused more than 10 casualties. The NEA has released investigation on the operation status of wind power equipment since 2010. It is basically defined that the defective of wind farm safe operation and management system is the main reason of grave accidents. Until now, China still does not build consummate wind farm operation and management system. Though wind power enterprises formulate operation, examination and secure standards by other industries for reference, they are neither applicable nor operable. Meanwhile, the carrying out of standards is not supervised effectively, illegal operations often occur. The wind power   China Renewable Energy 47

Industry Insight personnel are lack of professional skills and work experiences, the quality management messes, it is really hard to take effective measures to handle the accident effectively and timely when it occurs, which makes the accident much worse. To solve the problem of frequent accident, first of all, we suggest consummate wind power accident and breakdown reporting system, build the national wind power equipment breakdown and accident platform to collect wind power equipment accident and breakdown messages, and make these messages known to the public. Secondly, we suggest consummate the wind power standard system. As there are many gaps in China’s wind power standard system at present, we suggest formulate related standards, carry out testing and certification according to these standards to solve the problems of WTGS quality and accidents. Moreover, China should build wind farm safe operation and management system covering wind farm construction, debugging and operation. And standards on system evaluation and certification should be formulated to push forward wind farms to improve their operation and management. Meanwhile, China should strengthen qualification management of wind power industry, Wind farm construction; operation and maintenance personnel should be trained and examined before induction.

2.4 Strengthening international cooperation to achieve win-win of global market

Compared to leading countries with advanced wind technology, wind power development in China is still backward as a whole. We still have not mastered the core technology of WTGS yet, the key design ability of core components lacks, the related public service platform has not been built up yet and the level of standards, testing and certification still needs to be improved. As a big country of wind power manufacturing, if Chinese enterprises would like to compete and progress with the leading enterprises in the international market, we should enhance  48 China Renewable Energy

international cooperation and strive to improve the level to realize the win-win of global market. China should use global technology resource to take part in international technology development plan, so as to cooperate with foreign enterprises to carry out advanced technology and common technology research. Gearing chain and component test platform in countries with advanced wind power technologies plays an important role in technology improvement and industrialization, to name a few, Risø National Renewable Energy Laboratory, US National R e n e w a b l e E n e rg y L a b o r a t o r y, G e r m a n Wind Energy Institute and Spanish National Renewable Energy Center. And China should enhance cooperation with these agencies to build national wind power common technology platform, such as national wind testing center, certification center, information center and training center. At the same time, China should take involved in formulating international wind power technology standards; enhance international communication and cooperation on WTGS testing and certification to promote the adoption of WTGS testing and certification between China and foreigner countries.

Industry Insight Renewable energy has always been the focus of China-U.S. energy cooperation. China learned experience of policies, market and industrial management which aimed to support the development of renewable energy from USA. At the same time, many American enterprises set manufacturing and operating companies in China, which not only promotes the development of wind power development in China, but also gains profits from the continuous increase of renewable energy market in China. In 2009, the ‘U.S.-China Renewable Energy Partnership memorandum’ was authorized in Beijing by governments of U.S. and China. In this framework, ‘U.S.-China Renewable Energy Industry Forum’ was held in these 2 countries alternately once a year. With the help of this platform, U.S. and China share successful experience of renewable energy development, and communicate on various problems in the field of renewable energy fully, which plays a positive role in promoting the healthy & sustainable development of U.S.-China renewable energy.

3. The prospect of wind power industry in China After 2 years negative development, the government and industry have to re-examine

problems and bottlenecks restricted wind power development. The government departments in charge have released a series of policies to support and encourage the development of wind power, which cover industry development plan, technology research, industry management, economy encouragement and so on. And they ensure the industrial transforming and updating by examining and approving wind power projects strictly, strengthen management of grid-integrated wind farms, push on the grid construction and reforming, encourage technical research and innovation, consummate renewable energy subsidy regulations. At the same time, different enterprises in the wind power industrial chain take practical measures to build ability, diminish excess capacity, expand business mode, and improve innovation ability to transform smoothly. As the air pollution is more and more serious recently, developing renewable energy, as well as wind power has become an irresistible trend. In June, 2012, Chinese government released 12th Five-Year Plan for Renewable Energy Development and 12th Five-Year Plan for Wind Power Industry Development. It is written in these development plans that in 2015, the accumulated grid-integration capacity of wind power will be 100GW (5GW offshore), and yearly electricity generation will be 190 TWh, which will account for more than 3% of the whole generation. The complete wind power industry with international competition will form basically. These plans show the government’s determination to accelerate wind power development, provide good development prospect for investors, and push on wind power to play a much more important role in adjusting energy structure and dealing with climate change. And the large market provides fundament for Chinese wind power industry to transform to be strategic industry with international competition. In the future, as the policy improves and perfects, the development problem solves gradually, Chinese wind power industry will usher in a new development opportunity for sure.   China Renewable Energy 49

Industry Insight

The prospect of China PV market development Yang Shaonan, CNREC

The situation that key technologies and major markets rely on foreign countries is the most characteristic of Chinese PV industry. According to the data from China Photovoltaic Industry Alliance (CPIA), the amount of module produced in 2012 was 23GW in China, up 14% year-over-year. China production capacity for PV module was in the first place, which accounted for 60% of total volume and about 85% of modules were exported to foreign countries in 2012. Due to trade disputes between China and Europe and other countries, the international market of China PV modules is facing severe challenges. Seeking the way of products creation, promoting industry upgrade, enlarging domestic market is the direction of China PV industry development.

The goals of domestic PV market

The initial target of installed capacity was set to achieve 5 GW at the end of 1015. This target was adjusted to 10 GW in 2011. The 12th Five-year Plan for Solar Power Development, which was issued by the National Energy Administration in 2012, mentioned that China's solar power installed capacity would reach 21 GW at the end of 2015. The target includes 20 GW in PV and 1 GW in concentrating solar thermal power (CSP). The target was improved to 35GW at the beginning of 2013. This was the third adjusted target for Chinese for solar power development plan in 2015. The recent adjustment has indicated the determination of the government to promote domestic PV market.

The tendency of domestic PV market

Cumulative installed capacity of PV market in China was only 0.38 GW in 2010. It increased to 3 GW in 2011, and about to 6.5GW in 2012 which contained 4.2 GW large-scale photovoltaic power stations and 2.3 GW distributed application. Added capacity was about 3.5 GW in 2012 that included 1.8 GW in large-scale photovoltaic power stations and 1.7GW in distributed application.  50 China Renewable Energy

Industry Insight From the data of cumulative installed capacity, large-scale PV power station is still the major way to promote the development of China PV market, which accounted for two-thirds of the national total installed capacity. However, form the data of added installed capacity, distributed application and large-scale photovoltaic power stations had roughly the same market share in 2012 in domestic market. It reflected the fast development trendy for distributed utilization in China PV market.

The challenges of domestic PV industry

Overcapacity is one of the main challenges for current PV industry in China. The productivity for solar module was over 40GW in China in 2011, but only 30GW was required in the global at the same period. That was much more than global market demand. It was predicated that 21GW of modules would be produced in 2013. The global market demand would be 33GW in this year. The challenge of overcapacity still exists. As a result of overcapacity and the effects form global economic downturn, the price of PV products has dropped dramatically. The competition is more competitive in PV industry and some enterprises have faced shutdown or even bankruptcy. On the other hand, with rapid increase of production level and technology progress, the product cost has been dropped quickly. PV generation has entered a stage of large-scale application in China, which provides a great support to expand domestic market. However, with the market expanding, there are other challenges that have to be faced, such as how to plan power supply and power grid construction, how to perfect subsidy mechanism, how to solve the problem of insufficient subsidies and how to ensure reasonable market expend pace.

To enact policies and measures

The Chinese government takes PV industry and market very seriously. A series of policies and measures have been enacted to promote the

development for PV industry. These policies and measures would play a significant role to expand domestic market, to promote industry upgrade and to help entrepreneurs make correct decisions according to future market development. State Council executive meetings were hold in 2012 and 2013 respectively to discuss measures that can promote PV industry development. The former meeting was chaired by Premier Wen Jiabao in 2012. There are five measures were proposed, which includes to enact benchmark price for solar power stations located in different areas, to strictly control polycrystalline silicon and PV cells as well as modules production lines which is only used to expend productivity, to reduce government intervention and to prohibit regional protectionism. Premier Li Keqiang chaired another State Council executive meeting in June 2013 to propose 6 measures to support the development of PV industry. 1. To strengthen planning and industrial policies guidance, to promote the reasonable layout and to focus on the development of distributed PV applications. 2. Power grid enterprises should ensure that grid and PV power generation project are constructed synchronously, give priority for PV power generation and purchase electricity generated by PV in full amount. 3. To perfect PV electricity price support policy, to enact benchmark price for solar power stations located in different areas, to enlarge renewable energy fund, to guarantee electricity subsidy used for distributed application can be in place in time. 4. To encourage financial institutions take measures to reduce financing difficulties for PV manufacturing enterprises. 5. To support researches and development for key materials and equipment technology, to achieve industrialization and to enact PV industrial standards. 6. To encourage increase enterprise competitiveness and to limit overcapacity. In order to encourage the development of distributed PV generation, National Energy Administration issued the notification about   China Renewable Energy 51

Industry Insight Table1 Feed-in tariffs in different areas and subsidy for distributed PV system Large-scale PVpower station

Price (yuan/kWh) Area

Level I

0.75

Qinghai (Haixi, Haibei, Luoguo, Yushu)

Level II

0.85

Xinjiang, Ningxia, Inner Mongolia , Qinghai (Xining, Haidong,Hainan, huangnan), Gansu (Wuwei, Zhangye Jiayuguan, Jiuquan,dunhuang, jinchang) Sichuan(A ba, Ganzi), Yunnan(Lijiang Diqing )

Level III

0.95

Beijing, Tianjin, Heilongjiang, Jilin, Liaoning, Hebei (Chengde, Zhangjiakou, Tangshan Qinhuangdao) , Shanxi (Datong,Shuozhou, Xinzhou) Shanxi(yan 'an Yunlin), Yunnan rest area, Gansu rest area

Level IV

1

Other area

The subsidies for distributed PV system is 0.35yuan/kWh

distributed PV generation demonstration zone application in September 2012. The number of applied demonstration zone in each province should be no more than 3, and total installed capacity should be no more than 0.5 GW. Therefore, 15GW distributed PV application was encouraged in the nationwide. In order to promote the work, National Energy Administration requested total 14 provinces and cities to submit work program of distributed PV generation demonstration zone in June 2013. These regions include Beijing, Shanghai, Tianjin, Shenzhen, Ningbo, Qingdao, Dalian, Hebei, Guangdong, Jiangsu, Zhejiang, Shandong, Liaoning and Jiangxi. National Development and Reform Commission are researching feed-in tariff policy. The notification about to perfect the PV feed-in tariff policy draft was enacted to collect opinions from stakeholders. According to this draft paper, feed-in tariffs for PV power stations were set four levels based on local solar resource. The subsidies for distributed PV system are provided based on the power they produced. According to feedback, feed-in tariff that was set in the draft paper was lower than expectations. National Development and Reform Commission is soliciting opinions, the related policy is expected to be issued recently. With new policy approving, domestic PV market would be promoted actively. State Grid supports the grid-connection for distributed PV system. The document about

 52 China Renewable Energy

distributed PV grid-connected service work was issued by State Grid in November 2012. The document based on the principle of” support, welcome and service” to take measures in terms of planning, technical inspection, connecting, metering and safe operation to provide grid service for distributed PV systems which are used in roof top or BIPV program. Generally these systems are no more than 6MW and connected with grid under 10KV. The document request to simplify the procedure of gridconnection of distributed PV. The whole period should less than 45days. 5700 times consultation service was provided and 352 households distributed PV systems were connected with grid from the date of document issued to April 2013. Currently, large-scale PV power plants are main developmental model in western part of China, which accounts about two-thirds of total installed capacity. However, from the policies that have been issued or would be issued we can realize that distributed PV systems are getting more support from the government. Increasing numbers of PV enterprises gradually consider turned to invest distributed systems, especially for systems with thousands KW in public rooftop. Undoubtedly, Chinese PV market has great development potential in the future. Related departments are promoting the development of market actively. With related policies are been enacting, Chinese PV market would expand rapidly.

Industry Insight

Overview: U.S. Renewable Energy Markets & Policy American Council On Renewable Energy (ACORE)1

This report on United States renewable energy financial policy is the result of extensive research, outreach, and analysis conducted over the last three years. It identifies federal and state government policies that could promote efficient private sector capital formation and investment in the renewable energy industry.

State and federal policies have worked: renewable investment has grown rapidly:

Private sector investment in the U.S. renewable energy sector has grown significantly in recent years due in large part to manufacturing and technology cost reductions, state market demand policies, and federal tax policies. The combination of these factors has contributed to impressive growth for the renewable energy industry, and this scale in turn has further reduced technology costs. Over the past five years, more than 35% of all new power generation has come from renewable energy resources, including more than 49% of all new power generation in 2012– surpassing all other energy sources, including natural gas. Since 2004, more than $300 billion has been invested in the U.S. clean energy market, including $35.6 billion in 2012, with a corresponding significant increase in jobs. Renewable energy generation also enhances energy security by harnessing clean domestic resources to produce more of the energy we consume here in the United States.

1

This article is compiled by Collin Smith, US-China Program Team Member, American Council On Renewable Energy (ACORE) for China Renewable Energy Magazine, REIF 2013 Edition, July 2013. The information in this article primarily comes from the following source: American Council On Renewable Energy, CalCEF, and Climate Policy Initiative. Strategies to Scale-Up U.S. Renewable Energy Investment. Rep. Washington D.C.: ACORE, 2013.

  China Renewable Energy 53

Industry Insight

These policies have translated into concrete results in renewable energy’s market deployment:

Of all new U.S. generation capacity in 2012, 49% came from renewable energy, making renewable energy the largest source of new capacity over natural gas and coal. Four states added more than 1,000 MW in 2012. Texas led with 1,826 MW, while California came in second with 1,656 MW. Kansas installed 1,440 MW and Oklahoma installed 1,127 MW, while Illinois rounded out the top five with 823 MW. A record amount of wind energy was installed in 2012, adding 13,124 MW of installed capacity and accounting for 42% of all new electricity generating capacity. Solar energy installations also broke records, with a 76% increase in photovoltaic solar power installed in 2012 as compared to 2011. There were 300,000 homes in the U.S. with solar PV installations as of the first quarter of 2013, a number reached after 83,000 homes added new solar systems in 2012. This next year projects an additional 4.3 GW of new solar power installation, a number that’s a significant jump over 2012’s results and would represent a 30% increase year-over-year.2

This success was enabled by the alignment of federal, state, and private efforts: 2

The success of policies to date reflects the application of two important American concepts core to the progress of our nation: the role of Federalism to align our national and state governments behind a common objective, and the importance of public-private partnerships to leverage public and private resources. At the state-level, renewable energy portfolio standards (RPS) and policies like electricity market design have established the conditions through which renewable energy technologies have grown in recent years. The production and investment tax credits (PTC and ITC) have been the main federal policies complementing these important market structures.

Further scaling up requires cost-effective policies that can drive low-cost private investment:

To further scale up the industry and to maintain a leadership role in the global clean energy economy, substantially greater levels of lowercost capital investment will be needed. Our analysis suggests several principles to guide the formulation of a strategy to achieve this goal, based on these important recommendations:

Build on the success of current policy efforts

The first step to achieving this goal is to continue to build upon the success of existing

"Deployment: Key Statistics." Energy Fact Check. American Council on Renewable Energy, n.d. Web. 18 July 2013. .

 54 China Renewable Energy

Industry Insight policy efforts. Reinvigorated state RPS policies and long-term extension of tax credits remain important. Additional policies, including Master Limited Partnerships (MLPs) and Real Estate Investment Trusts (REITs), successful in motivating capital formation in other sectors, should be made applicable to renewable energy investment. These policies can serve to encourage even greater levels of lower cost capital investment. This combination of complementary, yet evolving federal and state policy remains essential to the continued scaleup of private low-cost capital investment in the sector.

Provide a level playing field for renewable technologies

Existing federal and state policies have also helped to level the playing field between renewable and conventional resources. However, robust policy support is still necessary to maintain market momentum. A myriad of federal and state fiscal, regulatory and other policies serve to support conventional energy development. Some forms of renewable energy are cost competitive with traditional sources of energy generation now and will be even more so within the next few years. Other renewable energy and emerging technologies, crucial to the clean energy transition, will require support for a longer period of time. During this transitional period when further scale-up is pivotal to the reduction of costs, it is crucial that policy continue to enable this growth. To be clear, this level of policy support is nothing that has not previously been provided to the energy technologies of the past or is currently provided to incumbent, non-renewable energy industries.

Improve the effectiveness and costeffectiveness of policies to drive lowcost investment

The challenge, in an era of fiscal constraint at all levels of government, is for the renewable energy industry to design and advocate for the most effective and efficient financial incentives in order to achieve rapid scale, leveraging the

most value possible. The optimal form of this private finance strategy will result in both the acceleration of capital commitments to the sector, and development of broadly-owned investment assets that provide economic opportunity to a significant portion of the American population.

Reform regulatory and market design to encourage renewable investment

In the power sector, regulatory reforms and improvements in electricity market design, such as greater use of utility rate-basing renewable energy investment and the use of value-based (vs. lowest price) procurement, can also play an important role in encouraging greater investment of private capital in renewable energy. Technology cost reduction and market attributes, such as scalability and relatively quick deployment timelines, provide important incentives for utilities to invest in and deploy renewable energy generation. Power market rules play a central role in governing electricity infrastructure investment decisions. Reforms to align them with renewable energy investment are important to encourage such investment. Many of these policy techniques are developed and deployed at the state-level. Therefore, a key supposition in this analysis is that state-level policy design for RPS markets will be crucial for industry success. Renewable energy generation is an increasingly important part of our nation’s energy security and economic growth. A mix of federal and state policy, coupled with electricity market reforms, is key to driving sufficient private capital formation and investment. Properly designed policies can succeed in leveraging existing and new sources of capital and investor pools. However, it is critical that decision-makers continue with the policies that are currently in place, while they explore new policies and regulations. This policy certainty will ensure continued market momentum, while serving as a bridge to a future of far more private sector investment in renewable energy.   China Renewable Energy 55