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The 2020 Beijing International Wind Energy Conference has been postponed to Oct.

In recent months, an unexpected COVID-19 outbreak has severely disrupted the pace of production and life around the world, with severe impact on all aspects of society.

China's wind power industry is not immune, the production of wind power equipment, project construction cannot be delivered and completed as planned, the industry is facing a huge risk of contract breach, waste of resources and investment decline.

At this time, the government is in urgent need of policies to "stabilize investment, stabilize employment, maintain growth and promote development", so as to minimize the negative impact of the epidemic on the industry.

 

Although the epidemic situation in China has been effectively controlled, the impact on the wind power industry is far from being eliminated.

Production capacity of domestic components and complete machine enterprises has declined sharply, annual wind turbine shipments will be reduced by about 30%, equipment supply will be delayed for more than 6 months.

Affected by the shortage of upstream equipment supply, transportation obstacles, and the delay in the construction of the power grid delivery project, the construction schedule of the wind farm falls far behind expectations.

The construction period of onshore wind power project is at least 6 months overdue.

Offshore wind power is more constrained by the construction window and the international supply chain, and project duration is delayed by at least 8 to 12 months.

At present, the global epidemic situation is becoming more and more severe, which leads to the intensified supply shortage of some parts and components, and makes wind power construction even worse.

Italy, Germany, Ecuador and other major raw materials and parts of the implementation of the "closure of the city", basa wood, PVC and other raw materials as well as the main bearings, gearbox bearings, IGBT chips and other components import and export began to be limited, is expected to last until the second quarter or even the third quarter of this year.

 

The effects will lead to a series of serious consequences.

According to the notice on Improving wind Power On-grid Price Policy (Issue and Reform Price No. [2019] 882) and Several Opinions on Promoting the Healthy Development of Non-water Renewable Energy Power Generation (Caijian [2020] No. 4) and other documents, onshore wind power projects approved by the end of 2018 are still not connected to the grid by the end of 2020.

The onshore wind power projects approved by solstice before the end of 2020 in January 2019 are still not connected to the grid by the end of 2021;

Offshore wind power projects that have been approved (filed) as required cannot be connected to the grid in full capacity by the end of 2021;

None of these projects will be eligible for the original approved electricity price.

These projects for the development of enterprises, in accordance with the above policy window, good plan, to complete the project bidding, procurement, construction of full production, but the delays caused by the outbreak, will completely disrupted the original plan, most of the planned and under construction projects are hard to completed in policy within the stipulated time grid node, which means that cannot enjoy subsidy electricity price of approval.

But all decisions on feasibility, investment and equipment procurement are made on the basis of subsidies.

These projects are bound to be shelved or cancelled due to the failure of the original electricity price and the loss of investment income, which will cause a huge waste of economic and social resources.

First, if the project that has been started is cancelled, all the previous investment will be lost, including the design cost, land acquisition cost, equipment procurement cost and part of the construction cost.

Second, most of the projects to be started have completed the unit bidding and procurement, and the whole machine enterprise has also purchased or ordered parts. If cancelled, it will inevitably cause chain reaction in the upstream and downstream industry chain, resulting in a large number of defaults and waste, as well as a series of economic disputes.

It is roughly estimated that if enterprises stop the planned and ongoing projects that cannot be connected to the grid on time due to the epidemic, the investment in fixed assets of wind farms alone will be reduced by hundreds of billions of yuan, and the impact on the industrial chain will be even more difficult to estimate.

This has a great impact on local economic development and employment.

 

Based on the above reasons, in order to implement the decision and deployment of the Central Committee on stabilizing investment, stabilizing growth and ensuring employment, effectively alleviate the negative impact of the epidemic, and ensure the stable investment and development scale of the industry, we hope that the government will issue policies in a timely manner to provide support:

 

1. For all the onshore wind power projects under construction under legal compliance, the grid-connection time point of enjoying the subsidized electricity price policy shall be postponed for at least 6 months.

The above-mentioned Document of the National Development and Reform Commission (NDRC) (No. 882) sets a unified date for the approval of onshore projects by the end of 2018 until the end of 2020. It is hoped that the extension policy will no longer distinguish between different years, and treat the approved projects before and after 2018 equally, so as to avoid new confusion.

First, from the perspective of the construction cycle, projects approved before 2018 are still within the period of validity stipulated by the policy. Projects that are legal and compliant should enjoy the same policy treatment as those approved after January 1, 2018.

Second, conditions for projects to be approved by 2018 will be better, more investment will be made by enterprises and the effect of investment will be obvious.

Moreover, many of the newly approved onshore projects in 2018 and beyond do not have the conditions to start construction, especially for grid connection.

At present, about two-thirds of the subsidy projects under construction by major development enterprises were approved before January 1, 2018, and some enterprises even fall into this category entirely.

If this part of the project is not included, it is difficult to achieve the expected effect of the extension policy, and it is difficult to avoid the above risks and losses caused by the shutdown.

At present, enterprises are trying their best to promote the construction of all projects. Once enterprises are forced to readjust the construction plan of all kinds of projects, the industrial chain is bound to shake, and various kinds of defaults surge.

Third, in terms of subsidies demand, more than half part of this project is located in the south of the Middle East region, according to the current policy, according to the hours when electricity price policy based on the rational use of check and ratify the central financial subsidies, three or four hours class wind zone reasonable use should be around 2000, and the low degree of wind power electricity subsidies strength in these areas, there is not need subsidies, not pressure too much money.

Maintaining the original approved electricity prices will enable these projects to continue, and will unlock great value in boosting local economic development, optimizing regional energy mix, and boosting employment.

 

2. A policy of postponing the grid connection time of offshore wind power projects approved (for filing) according to regulations for at least 6 months.

Due to the shortened construction window period, the shortage of installation ships and construction equipment resources, especially the deterioration of the upstream international supply chain caused by the epidemic, considering the complexity of offshore wind power construction, it is difficult for a large number of projects to complete the full capacity grid connection before the end of 2021.

In addition to seabed survey and foundation construction, equipment has been ordered and hoisting construction units have been contracted. Therefore, the approved electricity price cannot be enjoyed and the project basically has no investment value.

Companies will be caught between a rock and a hard place. The result will be to stop their losses in time, leaving behind a lot of "unfinished" projects.

 

3. Cancel the assessment of wind abandon rate of power grid enterprises this year.

Due to the impact of the epidemic, the electricity consumption of the whole society dropped significantly in January and February. According to the data released by the National Development and Reform Commission, although the growth began to return to positive growth in March, the growth rate is expected to slow down for the whole year, and the utilization rate of all kinds of power generating units is decreasing.

Although the national average wind abandon rate remained basically stable in the first three months, the trend of wind abandon rate is increasing. According to the original method, many areas may change from green to red.

Considering the consumption capacity is not in line with the actual situation according to the power load of the epidemic situation, which will mislead the national and regional policies to control the scale of wind power construction.

The most effective measure to boost investment in wind power is to relax or cancel the assessment of power grid brownouts this year and increase the annual newly added capacity of wind power.

 

In the face of the epidemic, the Central government called on all localities to make overall planning for the "six stabilizations", increase support, and adopt policies to stabilize employment with adequate assistance, so as to stabilize investment and growth and boost expectations.

As a strategic emerging industry with a strong driving effect, the wind power industry needs more national policies to protect it. Through practical measures, the impact of the epidemic will be minimized, so as to boost the confidence of the industry and guarantee the industry to enter the era of affordable Internet access smoothly.

Wind power industry enterprises and colleagues, should pull together, overcome difficulties.

Shorten the construction period by means of coordination between upstream and downstream, careful planning and reduction of turnaround time.

To overcome the epidemic and economic downturn to make due contributions to the industry.


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