OPPORTUNITIES FOR DUTCH CLEAN ENERGY
COMPANIES IN CHINA
AZURE INTERNATIONAL
December 2013
Prepared for:
In collaboration with:
Azure International
Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
Opportunities for Dutch Clean Energy Companies in China
Authors: Anders Hove, Guo Hong, Xue Shan, Emiel van Sambeek
Azure International
Suite H, 6 Floor, Office Tower, Oriental Kenzo
48 DongzhimenWai Street
Dongcheng District, Beijing
100027, China
T +86 10 8447 7053
F +86 10 8447 7058
I www.azure-international.com
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Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
Contents
1
PREFACE ...............................................................................................................................................5
2
POSITIONING DUTCH CLEAN ENERGY TECH ..........................................................................................6
2.1
DUTCH BIOENERGY STRENGTHS ................................................................................................................ 6
2.2
DUTCH WIND STRENGTHS ....................................................................................................................... 7
2.3
DUTCH SOLAR STRENGTHS ....................................................................................................................... 9
2.4
DUTCH SMART GRID STRENGTHS .............................................................................................................. 9
3
TRENDS AND DRIVERS FOR CLEAN ENERGY TECHNOLOGY IN CHINA ..................................................11
3.1
MACRO DRIVERS FOR CLEAN ENERGY ........................................................................................................ 11
3.2
POLICY TARGETS FOR CLEAN ENERGY ........................................................................................................ 12
3.3
AREAS OF POLICY UNCERTAINTY............................................................................................................... 13
3.4
SUMMARY .......................................................................................................................................... 14
4
WIND .................................................................................................................................................15
4.1
POLICY ............................................................................................................................................... 15
4.2
TRENDS AND MAJOR PLAYERS ................................................................................................................. 16
4.3
FUTURE STRATEGY AND POTENTIAL COOPERATION ...................................................................................... 18
5
SOLAR ................................................................................................................................................19
5.1
POLICY ............................................................................................................................................... 19
5.2
PROJECTS AND KEY PLAYERS.................................................................................................................... 20
5.3
FUTURE STRATEGY AND POTENTIAL COOPERATION ...................................................................................... 21
6
SMART GRIDS.....................................................................................................................................23
6.1
POLICY ............................................................................................................................................... 23
6.2
PROJECTS ........................................................................................................................................... 23
6.3
KEY PLAYERS ........................................................................................................................................ 25
6.4
FUTURE STRATEGY AND POTENTIAL COOPERATION ...................................................................................... 26
7
ENERGY STORAGE ..............................................................................................................................28
7.1
POLICY ............................................................................................................................................... 28
7.2
PROJECTS ........................................................................................................................................... 30
7.3
KEY PLAYERS ........................................................................................................................................ 30
7.4
FUTURE STRATEGY AND POTENTIAL COOPERATION ...................................................................................... 32
8
BIO-ENERGY .......................................................................................................................................33
8.1
CURRENT STATUS AND TRENDS ............................................................................................................... 33
8.2
GASEOUS BIO-ENERGY ........................................................................................................................... 33
8.3
LIQUID BIO-ENERGY .............................................................................................................................. 34
8.4
SOLID BIO-ENERGY ............................................................................................................................... 35
8.4.1 Solid Biomass to Electricity ......................................................................................................... 35
8.4.2 Solid Bio-fuel Boilers .................................................................................................................... 36
8.5
CONCLUSIONS ..................................................................................................................................... 36
9
INVESTMENT TRENDS IN AND OUT OF CHINA ....................................................................................37
9.1
9.2
CHINA OUTBOUND DEALS FOCUS ON STRATEGIC EMERGING INDUSTRIES ......................................................... 37
CHINA OUTBOUND INVESTMENT IS GROWING, BOTH FOR M&A AND VC/PE ................................................... 38
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9.3
THE GEOGRAPHY OF INVESTING IS SHIFTING ............................................................................................... 39
9.4
PRIVATE COMPANIES ARE COMING TO THE FORE ......................................................................................... 39
9.5
CHINA’S CLEANTECH INVESTING INTERESTS DIVERSIFYING.............................................................................. 39
9.6
CONCLUSIONS ON CHINA OUTBOUND INVESTMENT TRENDS ......................................................................... 40
10 GUIDANCE ON A SUCCESSFUL CHINA STRATEGY ................................................................................42
10.1
STARTING NOTIONS ON CHINA ................................................................................................................ 42
10.2
TOWARDS EFFECTIVE STRATEGIES ............................................................................................................ 44
11 GOVERNMENT SUPPORT FOR DUTCH CLEANTECH COMPANIES IN CHINA..........................................47
11.1
INTRODUCTION .................................................................................................................................... 47
11.2
NL AGENCY......................................................................................................................................... 47
11.3
MOU ENERGY COOPERATION CHINA – NETHERLANDS ................................................................................. 47
11.4
SUPPORT FOR DOING BUSINESS IN CHINA .................................................................................................. 48
11.5
REPRESENTATION OF THE NETHERLANDS IN CHINA...................................................................................... 49
CLEANTECH HOLLAND ................................................................................................................................50
AZURE INTERNATIONAL .............................................................................................................................50
REFERENCES ...............................................................................................................................................51
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1
Preface
China is now the largest and one of the most dynamic markets for cleantech in the world and
offers significant opportunities for Dutch clean energy entrepreneurs. Nevertheless, many clean
energy technology companies are insufficiently aware of the opportunities that China provides.
Such opportunities could consist of market potential of the huge China market. For early and mid
stage technology companies China could also provide interesting partnership opportunities that
can lower the cost of commercialization and accelerate the commercialization worldwide.
Therefore it is often wise to start incorporating internationalization and making the step to China
at an early stage of strategic business planning. However, many companies do not know where to
start in conducting business in China and what to plan for. A lot of growth and export potential
may remain unexploited if an effective China strategy is not considered. In addition, the
Netherlands and China have a joint MoU on energy collaboration that is largely focused on clean
energy. Activities under this MoU seek to reinforce institutional and business collaboration
between China and the Netherlands. NL Agency is the executing agency for this MoU on behalf of
the Dutch government.
In this context FME-CMW, Azure International and NL Agency have developed this report on the
business opportunities for Dutch clean energy technology companies in China. This report outlines
the overall nature of those opportunities and makes clear the vast range of potential cooperation
between the two countries across several areas of clean energy technology.
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Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
2
Positioning Dutch clean energy tech
Historically, the Netherlands has always been one of the most densely populated countries in the
world. This has forced it early on to find ways to mitigate the environmental impact of its dense
population, intensive agriculture, industry and its distribution and logistics sector. The result is
broad range of unique and interconnected innovations in technology, business, regulation and
policy—including policy on ecological areas.
The Netherlands’ energy infrastructure is dominated by natural gas and is strongly integrated with
gas markets throughout Europe. With diminishing gas reserves the Netherlands is now aiming to
leverage its gas infrastructure and technological knowhow to transition to a green gas supply. Its
traditional position in agricultural and chemical industries is now the basis of a transition towards
a bio-based economy. The Netherlands’ renewable energy target is to increase the share of
renewable energy from 4% in 2010 to 16% by 2023.
With its long maritime tradition, the Netherlands offers knowledge and know-how in the areas of
marine engineering relevant to both the oil and gas sector as well as the emerging offshore wind
sector. With the Rotterdam port and Amsterdam airport the Netherlands is one of the main
logistical hubs of Europe. Its location and position as a distribution node are also important for its
connection to Europe’s energy infrastructure.
The 2012 Global Cleantech Innovation Index puts the Netherlands on the 14th place, just below
China which takes the 13th position.1 The two countries therefore appear close to each other in
terms over overall cleantech innovation. However, the overall ranking masks important
differences and areas of complementarity between the two countries. The most striking difference
and complementarity follows from the fact that China scores well on commercialization of
cleantech innovations, while the Netherlands scores better on generating new innovations.
Another important difference is that innovations generated by the Netherlands result more from
its general innovation drive and infrastructure across the economy, whereas China has a more
specific cleantech focused innovation and deployment agenda.
Economic ties between the Netherlands and China are strong. Within the EU, the Netherlands is
third largest investor in China and the Netherlands is also the third largest destination of
investment from China. Within the EU, the Netherlands is the second largest trading partner with
China, after Germany and it ranks number ten on the global list of China’s trading partners.
2.1
Dutch Bioenergy Strengths
Key features relevant to bio-energy development are the high population density resulting in a
strong need to effectively manage environmental pressures associated with resource use, an open
economy with a strong focus on distribution and logistics, a highly intensive agricultural sector and
a strong knowledge infrastructure. Key areas of strength include:

Torrefaction: The Netherlands has eight companies focused on developing different
technology concepts for different biomass and waste feedstocks. Currently three
demonstration plants are in operation.
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Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013






2.2
Gasification: The Netherlands has several companies with advanced expertise in the
design and engineering of biomass gasification systems, as well as know-how in the
operation of gasification systems for indirect co-firing of solid biomass in coal-fired power
stations.
Gas cleaning and upgrading are critical to increase the quality biogas from digestion
processes or syngas from gasification processes so that it can be fed into the natural gas
mains, used as a clean burning fuel or used as a chemical feedstock. With a well-developed
natural gas infrastructure and emerging green gas sector the Netherlands has extensive
expertise in gas cleaning and upgrading, as well as R&D in biomass gasification and syngas
cleaning.
Second generation biofuels: The Netherlands also has advanced expertise and technology
in second generation liquid biofuel production technologies. Strong centres of technology
development are clustered around Wageningen Agricultural University (www.wur.nl) and
Technical University of Delft (www.tudelft.nl). Furthermore, DSM provides yeasts and
enzymes for cellulose conversion.
Co-digestion: The Netherlands has seen rapid development of co-digestion projects.
Specific expertise and know-how in the Netherlands exists in the design and operation of
co-digestion facilities of organic waste and wastewater treatment plant sludge. In
addition, there is emerging expertise on increasing the quality of digestate to improve the
utilization potential as fertilizer.
Algae: A number of demonstration algae projects for food and energy applications are
being implemented in the Netherlands and by Dutch companies and organizations outside
the Netherlands. Through these activities a number of Dutch companies have built up
strong research, design and operating expertise and knowhow in this field.
Environmental controls: With its high population density and intensive use of resources
and space the Netherlands has long had a strong focus on environmental management.
Moreover, the use of biomass for energy production requires special environmental
management systems and technologies. This has resulted in specialized companies that
provide environmental control technologies such as flue gas cleaning, fly ash and bottom
ash processing, including specifically for bio-energy systems.
Dutch Wind Strengths
With its long history of offshore oil and gas development, the Netherlands boasts a well-developed
offshore engineering and construction sector, and now has a number of companies active in the
the field of offshore wind. Offshore engineering and construction is a key area of know-how,
expertise and technology in the Netherlands. Damen offers wind farm maintenance barges, utility
vessels, fast crew suppliers and offshore lift capability, and has 16 shipyards located throughout
the world.2 Van Oord has been involved in offshore wind farm projects in North West Europe,
including the 62 MW Teesside plant in the U.K., the Dutch Princess Amalia Wind Farm and the
Belwind Phase I Offshore Wind Farm. The company provides construction services such as
foundation and turbine installation, cable installation, scour protection, and Engineering,
Procurement and Construction (EPC) services.3
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Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
Operations and maintenance of offshore wind farms is a key goal of Project DOWES, or Dutch
Offshore Wind Energy Services. The project, a consortium of five companies, is aimed at
experimenting with technologies for improved maintenance in the following areas:









Development of fibre optic sensors to monitor blade conditions
Development of corrosion sensors to monitor tower conditions
Data warehousing
Data into information processing
Integration of spare part management
Integration of logistical planning and services
Costs optimisation
Costs estimation
Operational and strategic decision support
The project is partly financed by the EU and was planned to take place between 2009 and 2013,
meaning that results and follow-on work should be forthcoming.4
The Netherlands has set the goal of research and development to reduce the cost of installing
offshore wind by 40% from 2010 to 2020. The development of the sector into a worldwide
industry leader is being coordinated by the Topconsortium Kennis en Innovatie Wind op Zee, or
Top Consortium for Knowledge and Innovation Offshore Wind, which is part of the Dutch
Topsector Policy that targets the development of successful industry sectors through research and
development in cooperation with universities and knowledge institutes. The TKI Offshore Wind
directs the research, innovation activities and implementation of offshore wind technology for
industry (including SMEs) in Netherlands. In addition, the TKI Wind op Zee promises rapid
dissemination and deployment of the developed knowledge, techniques and working methods. TKI
Offshore Wind is contributing to Project Leeghwater, an offshore wind farm for test and
demonstration of innovations.5
The Netherlands is already working to form connections between industry and China on wind
technology. The China Wind Consortium of the Netherlands, a spin-off from the MoU on energy
cooperation between the Chinese National Energy Administration (NEA) and the Netherlands
Ministry of Economic Affairs, is a group of ten companies and three knowledge institutes, that
have worked closely together with the Dutch government and Dutch diplomatic network in China
to increase market share. NL Agency has initiated the government-to-government-project “SinoDutch energy cooperation wind energy policy” aimed at bilateral cooperation in offshore wind
power. The kick-off took place in June 2013 in Shanghai with a seminar on cost reduction in
offshore wind.
Holland Home of Wind Energy (HHWE) (www.hhwe.eu) is an independent exporters association
representing the interests of the Dutch wind energy companies and knowledge institutes abroad.
HHWE is a platform for encouraging international collaboration on wind energy and promote the
Dutch wind energy sector. Particular regions targeted by the collaboration include China, Japan,
Korea, India, Brazil and the United States. HHWE is able to set up public-private partnerships to
enter emerging markets, as well as providing market scans and legal support. HHWE has
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Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
sponsored booths at conferences around the world, including recently in China and Brazil; recent
trade missions in Yokohama, Japan, and Shanghai, China, have focused on potential for
collaboration on offshore wind.
2.3
Dutch Solar Strengths
The Netherlands has a strong track record in Solar PV technology development. In the area of
crystalline solar PV the Energy research Centre of the Netherlands (ECN, www.ecn.nl ) is a globally
leading research institute with advanced technologies in back-contact cells and n-type
monocrystalline cells.
TKI Solar PV consortium is one of the Netherlands’ Top Sector Energy collaboration platform, with
over 60 companies now participating. Currently, the TKI is focused on three areas: systems and
applications, wafer-based silicon PV technology, and thin-film PV. Within thin film, TKI Solar PV
areas of R&D focus include organic PV (development of processes and equipment for roll to roll
manufacturing of novel OPV concepts by all printed processing, and development of OPV module
integration concepts), and copper-indium-gallium-diselenide (CIGS) thin-film PV. As part of the
CIGS element of the platform, Dutch and international partners are already working together to
develop equipment and processes for roll to roll manufacturing solutions that combine improved
optical (transmission and light management) and electrical (conductivity and charge conservation)
properties to improve PV performance at reduced cost. The Solliance consortium
(www.solliance.eu/) is coordinating these collaborations.
Several universities are also engaged in advanced research and technology development in solar
PV. The Technical University of Eindhoven is focused on thin-film technology development through
the Solliance consortium with ECN, TNO (www.tno.nl) and industrial partners.
The Netherlands also has a strong position in supplying manufacturing equipment for solar cell
production with companies such as Tempress (www.tempress.nl), Eurotron (www.eurotron.nl/)
and Smit Ovens (www.smitovens.nl/) as market leaders in their segment.
2.4
Dutch Smart Grid Strengths
The Netherlands is home to a high quality, dense, and resilient electricity network, and the country
is extremely well-connected in terms of information technology. Approximately 96% of homes are
connected to coaxial or fiber-optic networks and the country has extensive ICT-development
capability. The country is experienced in testing resilience and security technologies as well as
peak shaving and load control. The Top consortium on Knowledge and Innovation (TKI)
Switch2SmartGrids (S2SG) is one of the seven TKIs within the Dutch top sector of energy. Key
Dutch smart grid companies include Alliander, DNV KEMA, Enexis, and TNO.
Specific examples and areas of expertise include:


Using gas fired electricity generators to balance wind power
The DC cable between Norway and the Netherlands using Norwegian large scale storage
for balancing Dutch wind-power facilitating the north-west European market
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



Intelligent substations with storage solutions
Local self-healing micro grid solutions
Supply and demand matching technologies and solutions, such as TNO’s PowerMatcher
Development of open standards for uniform, large scale integration of Smart Grid enabled
equipment by the Flexiblepower Alliance Network (FAN), founded by TNO and Alliander.6
In addition to these areas, the Smart City Amsterdam includes different projects ranging from
sustainable living, sustainable working, sustainable mobility and sustainable public space.
Consumers use home management technologies to help reduce and shift energy consumption.
In 2010 the Smart Energy Collective 5000 was organized; the collective is a cross-sector
partnership between 23 companies in the Netherlands (including Alliander, Enexis, Stedin, IBM,
Philips, Smart Dutch and Siemens). The collective planned large scale demonstration projects
covering roughly 5000 residential and industrial customers.7
Ecofys, DNV KEMA and Utrecht University have collaborated on research to show how the
integration of a large quantity of PV can be achieved cost-effectively, and how solar power can be
effectively connected to consumers based on smart grids and demand response. The project
partners developed and validated a solar forecasting prediction system, a tool that can better
predict the performance of local PV installations.8
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3
Trends and drivers for clean energy technology in China
3.1
Macro drivers for clean energy
Clean energy technology in China has advanced rapidly in the last five years, making China the
largest clean energy market in the world, and there is no doubt this trend will continue. Several
important drivers underlie China’s push towards clean energy:

Urgency of shifting from coal: Among major world economic regions China is uniquely
reliant on coal as a share of its energy mix, which has led to China becoming the largest
greenhouse gas emitting country. Coal combustion is also one of the main contributors to
urban air pollution. China has established targets for non-fossil energy—nuclear, hydro,
biomass, wind and solar power—to rise from an 8% share of China’s energy mix in 2011 to
15% by 2020, but coal will still account for over 60% of China’s primary energy in that
year.9

Urgency of addressing air pollution: Since Beijing began preparation for the 2008 Olympic
Games China has made addressing urban air pollution a policy priority, however only in
the past two years has the government made great strides in providing data and public
health information regarding pollution. Hourly PM2.5 data from the Chinese government
became widely available in 2012 and Chinese media began to devote substantially more
coverage to air pollution events in 2013. The government also established its first major
five-year plan targets for urban PM2.5 on a provincial basis.

Urgency of water and carbon issues: China’s coal producing areas are mainly located in the
northern provinces which also face mounting challenges with water supply and water
pollution. Coal thermal plants typically consume large volumes of water.10 Proposed coalto-gas and coal-to-liquids projects have been criticized as further exacerbating this
problem.11 Furthermore, urbanization, agricultural practices and the effects of climate
change will continue to contribute to water shortages.

Need to promote clean energy as part of industrial policy: From its inception, clean energy
policy has been driven by economic and industrial goals, particularly in the area of
renewable energy. China’s initial focus on relatively economical wind and bio-energy
projects was designed both to take advantage of carbon credit trading and establish new
industries that could eventually create export markets. The solar industry in China began
as a low-cost export industry for the subsidized renewable energy markets in Europe and
elsewhere, but in the last few years has risen from just 10% of the global solar market to
33%. 12 Recently, to cope with worldwide global manufacturing overcapacity, the
government has focused on industry consolidation,13 while maintaining active policies and
lending practices designed to encourage acquisition of key energy technologies, especially
through the Strategic Emerging Industries plan.14

Need to shift towards circular economy in terms of resource utilization: Reducing reliance
on export-oriented manufacturing has been a priority for years, and the government has
tried to promote domestic consumption of goods and services and the creation of a so11
Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
called circular economy, which includes promoting water-saving and energy-saving
products, waste reduction and recycling. The 2009 circular economy law states that, “The
state encourages and guides citizens to use products and recycle products featured by
energy saving, water saving, material saving and environmental protection, and reduce
the generation and discharge of wastes.” 15
2013 marks a major leadership transition for China, and in the first few months of the year the
state-run media have made it clear that the government intends to make environment a top
priority—in other words, the quality of growth will be considered as well as the size of growth. The
prior leadership team had established numerous policy goals related to environmental issues,
including carbon emissions, energy intensity, clean water and clean air. In 2009 China’s State
Council approved a commitment to reducing carbon intensity of GDP versus 2005 levels by 40-45%
by 2020.16 The subsequent 12th Five-Year Plan (2011-2015) includes targets for energy intensity:
China plans to achieve a 16% reduction in energy intensity, compared to a 19% reduction achieved
in the prior five years.17
3.2
Policy targets for clean energy
In addition to these measures, China has made renewable energy technology a leading industry
and has devoted a large number of policies to its promotion. Not only have these policies helped
establish a new, high-tech manufacturing industry in China for wind and solar, but they have
slowly begun to transform China’s energy production. Near term targets in this area include:

Wind: China had 78 GW of wind power installed at the end of 2012,18 of which 63 GW was
connected to the grid.19 China’s official target for 2015 is for at least 100 GW of gridconnected wind capacity.20

Solar: China had 4.5-4.7 GW of solar PV installed at the end of 2012, accounting for just
14% of world installed capacity.21 In December 2012 China established a new 2013
installation target of 10 GW, which would more than triple the country’s total solar
capacity.22 In January 2013, the National Energy Agency announced an unofficial 2015
total solar capacity target of 35 GW, up from the prior target of at least 21 GW.23 The new
35 GW target includes 10 GW of distributed solar.24 China anticipates reaching at least 50
GW of solar by 2020.25

Bio-energy: China's bio-energy production to end users experienced dramatic growth from
160 PJ in 2000 to more than 1500 PJ in 2010, and it is expected to further double during
the 12th Five-Year Plan period (2011-2015). Bio-energy production accounted for around
0.6% of China's total energy consumption in 2012.26

Strong and Smart Grid: In 2009, the State Grid Corporation of China (State Grid) released
an RMB 3.5 trillion investment plan called the strong and smart grid. The 11-year plan
focuses on building high-voltage transmission, but includes RMB 384 billion for smart grid
solutions.27 These investments will help increase the distribution efficiency of intermittent
renewable sources, such as wind and solar.28
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3.3
Areas of policy uncertainty
Overall, China’s targets in the field of renewable energy have had an impressive record of success,
but there have been some areas of weakness and in several cases targets have not been met or
policies have been announced and not carried through to implementation. Currently, there are
several unsettled areas of policy surrounded clean energy. These include:

Carbon taxes and carbon trading: Over the past several years there have been a number of
announcements concerning introduction of carbon taxes, resource taxes or environmental
taxes. In 2012 several cities and provinces were designated as pilot carbon trading regions,
exchanges have been set up and several carbon credit trades have been made.29 However,
in the absence of clear rules, allocation procedures, and properly benchmarked historical
emissions measurements, the carbon trading market remains in its infancy.30

Renewable portfolio standards: In 2012 China announced a draft standard for the amount
of renewable energy that would be generated by each province by 2015 from solar, wind
and bio-energy.31 The plan could help address past problems caused by an emphasis on
installed capacity as opposed to actual generation, as well as help more closely align
renewable generation with provinces that have adequate transmission and local power
demand. However, implementation schedules remain unclear.32

Coal caps: As part of China’s new aggressive campaign against air pollution, the central
government in 2012 announced 2015 targets for PM2.5 levels in certain provinces.33 To
achieve these targets the government has announced that coal consumption in certain
regions would be reduced versus present levels—Hebei, Shandong and Beijing would have
to reduce coal consumption by an absolute amount of 73 million tons, or 2.5% per year,
between 2013 an 2017, a dramatic change versus business-as-usual growth of 6% for
these same provinces.34 In March 2013, China announced a non-binding nationwide coal
use cap of 3.9 billion tons for 2015,35 and in June 2013 stated that coal should account for
no more than 65% of national energy use in 2017.36 These policies could have an immense
impact on the way energy is produced and consumed in China, depending on how they are
implemented. According to some studies, in the past, regional officials have evaded such
targets by providing inaccurate statistics.37

Opening door to foreign participation in China’s energy sector: In early 2013 China
completed a historic leadership transition. There has been considerable speculation about
the degree of market-oriented reforms that will be pursued under the new leadership.
After the conclusion of the 3rd Party Plenum in early November 2013, the government
published a document covering decisions taken at the session, including a long section
related to the reform of state-owned enterprises.38 Shortly after the Plenum, Premier Li
Keqiang spoke at the China Council for International Co-operation on Environment and
Development in Beijing about the need to open up the environment and renewable
energy sectors to greater foreign cooperation.39 Most analysts agree that reform and
opening of the state sector will take considerable time and require overcoming powerful
interest groups that favor the status quo.
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3.4
Summary
China’s increasingly aggressive targets for renewable energy and new goals for pollution
reduction, combined with the urgent need to do more to meet the government’s vision of the
China dream, imply opportunities across a range of clean energy industries. Though China faces
immense challenges in transforming its economy from one based on heavy industry and energy
from coal to one based more on a diversified economic base and fuel mix, including clean
renewable energy, the country has already made great strides in establishing itself as a world
leader in installed wind capacity and solar PV manufacturing. As these developments spread to
new areas there will be a large scope for collaboration between China and other advanced
industrial economies. The following chapters elaborate key developments in selected clean energy
sectors. The figure below summarizes the key areas for collaboration between China and Dutch
clean energy tech companies. A full circle on the China side implies strong capabilities, demand
and focus, whereas a full circle on the Netherlands side signifies strong capabilities and supply.
FIGURE: CHINA – NETHERLANDS COLLABORATION POTENTIAL
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4
Wind
4.1
Policy
China was a late-comer to the race to adopt wind energy, but thanks to extensive policy support
and targets for installations the country now leads the world in wind capacity, and Chinese wind
manufacturers have generally succeeded in establishing themselves in foreign as well as domestic
markets. Wind power in China has been a story of dramatic growth, but in recent years the
industry has stabilized as developers cope with difficulties integrating wind with the country’s grid.
China had 78 GW of wind power installed at the end of 2012,40 of which 63 GW was connected to
the grid.41 China’s official target for 2015 is for at least 100 GW of grid-connected wind capacity,
which the country should easily surpass based on present trends. China’s 2015 wind target also
specifies that China should have 5 GW of offshore wind installed by that date, and wind power
should contribute at least 190 TWh of generation to the grid each year.42 The generation target
should help ensure that wind development policy focuses more on efficient and effective energy
generation than on investment in capital equipment.
FIGURE: CHINA WIND INSTALLED CAPACITY, 2004-2012, FORECAST FOR 2013
120 GW
100 GW
80 GW
60 GW
40 GW
20 GW
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Source: Azure International
For the wind sector, feed-in tariffs under national policy range from RMB 0.51/kWh and RMB
0.61/kWh. The tariff amounts are determined by geography, with the windiest regions offering
lower tariffs. A small number of cities and provinces have established higher tariffs, 43 and there is
currently no offshore wind tariff.
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FIGURE: WIND FEED-IN TARIFF FOR DIFFERENT REGIONS
黑龙江
吉林
新疆
辽宁
内蒙古
北京
天津
宁夏
青海
山西
陕西
西藏
河南
湖北
四川
重庆
Class I – RMB 0.51/kWh
Class II – RMB 0.54/kWh
Class III – RMB 0.58/kWh
湖南
贵州
云南
广西
山东
江苏
安徽
江西
福建
广东
Class IV – RMB 0.61/kWh
Source: NDRC
The sunniest and windiest regions are located in China’s North and West, which are lightly
populated relative to China’s coastal regions. In the three provinces of Xinjiang, Inner Mongolia
and Gansu provinces, wind and solar developers suffer curtailment when local demand and
transmission are insufficient to handle the power. The problem is getting worse: in 2012 curtailed
wind energy doubled from the prior year.44 Curtailed power is currently not compensated, though
the government may change this policy once measurement methods are in place.45 As a result of
curtailment, wind developers have gradually shifted away from these regions, but the alternatives
(such as coastal provinces) are also potential places for solar. In addition, regions with ample solar
continue to promote large-scale solar facilities that dwarf local demand, causing concern that the
solar industry will repeat the pattern experienced by wind.46
Subsidy payment delays can take place in areas with too many renewable plants relative to local
load. This is because feed-in tariffs are paid by provincial grid companies to plant operators out of
funds collected through a surcharge on most electricity customers, but for provinces like Gansu
there is insufficient local surcharge collection to cover costs, and the province must receive
payment transfers from other grid companies. A rapid increase in solar installations in certain
regions with ample wind capacity will worsen the problem, since solar is compensated at an even
higher feed-in tariff. As a result of payment delays, state-owned developers have no choice but to
pass along the delays to their suppliers.47
4.2
Trends and major players
China’s leading wind developers and manufacturers all faced tough times in 2012. Manufacturers
in particular were hard hit by a decline in orders as developers worked through a backlog. Sinovel
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Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
revenues have fallen from an RMB 2-3 billion quarterly run rate in early 2011 to just RMB 551
million in 3Q 2012. Goldwind revenues have fallen from a 3Q 2011 high of RMB 4.2 billion to RMB
2.5 billion in 3Q 2012. Ming Yang revenues have fallen from a high of RMB 1.9 billion in 3Q 2011 to
RMB 788 million in 3Q 2012. Margins and profits have suffered as well. For developers the
situation has been somewhat better, with revenues generally staying flat despite increased
installation rates and net profit flat or falling.
FIGURE: CHINA TOP 10 DOMESTIC AND FOREIGN WIND MANUFACTURERS, BY CUMULATIVE
INSTALLED CAPACITY IN 2012
Goldwind
Sinovel
Dongfang Turbine
Guodian United Power
Vestas
Gamesa
Mingyang
Shanghai Electric Sewind
Xiangdian
GE Wind
-
2 GW 4 GW 6 GW 8 GW 10 GW 12 GW 14 GW 16 GW
Source: Azure International
Foreign wind manufacturers such as Vestas and Gamesa have also faced headwinds, and pointed
to China as one of the main causes of the global wind slow-down. Gamesa’s reported Asia order
intake fell from 343 MW in the first half of 2011 to 102 MW in the first half of 2012—Gamesa
blamed project delays and grid connection problems for the drop. Vestas’ shipments to the Asia
Pacific region fell from a 2011 high of 344 MW in 4Q 2011 to 101 MW in 3Q 2012. Lower
shipments and orders supports the thesis that China has been working through a major overhang
in orders, while installations have been showing a more stable pattern.
The period of slower growth and absorption of inventory has led most players to deepen
involvement in the international market, despite concerns that both Europe and North America
are expanding less rapidly. Latin America, India and Australia are also expansion targets. Within
China, developers continued to deepen their exposure to regions outside China’s top wind
resource areas.
The industry in 2012 faced a large overhang of manufacturing capacity at a time when cash flows
were challenged by policy issues (late interconnections and slow payments of surcharge revenue,
for example) and reduced international demand. Despite this anticipated return to prior levels,
wind turbine manufacturers continue to make downbeat statements about prospects for 2013.
For example, Sinovel Chairman Han Junliang, speaking in November 2012 at an industry
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conference, noted, “China’s wind market will be a bit arduous next year as it demands quite a
process to cope with grid constraints, slowing growth and economic environment.”48
4.3
Future strategy and potential cooperation
As noted above, the market for wind power in China has stabilized, and the country has developed
a mature domestic wind industry. For large-scale projects in places like Inner Mongolia, domestic
manufacturers have supplanted imports for wind turbines and towers, and development of
renewable energy projects in China is relatively closed to foreign players. The 2011 intellectual
property scandal involving Sinovel and American Superconductor also gave foreign companies
pause, and the case has yet to complete its course through the Chinese court system. However,
there remain a number of foreign companies participating in the Chinese wind industry, not only
in the turbine market but also in the area of components, magnets, rotors, blades, power
converters and advanced coatings.
Given that growth in wind power capacity is shifting towards lower wind speed regions and
offshore areas, technologies specific to overcoming these challenges will be in high demand. For
many years China’s government has made offshore wind a development target, especially wind
bases in intertidal areas, yet without providing the necessary policy support or pricing structures
to reach its goals. Given the need to expand wind development offshore, these policy barriers will
likely be temporary. When offshore wind does start to advance, China will need extensive offshore
engineering and construction and offshore operations and maintenance experience, some of
which will likely come from the international oil and gas sector. Such services could range from
cranes and barges for offshore installation to cable-laying, advanced coatings and weatherization.
Wind integration is another area where China urgently seeks solutions to the ever-greater
problem of using the wind energy from turbines already installed or soon to be built. Needs
include improved forecasting technologies, communications networks, remote monitoring and
smart grid equipment. In the long-term, depending on the trajectory of technology cost, energy
storage has potential for helping resolve wind curtailment problems in areas with high wind
penetration. China is likely to continue to subsidize energy storage demonstration projects, some
of which will include foreign technology.
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5
Solar
China had 4.5-4.7 GW of solar PV installed at the end of 2012, accounting for just 14% of world
installed capacity.49 In December 2012 China established a new 2013 installation target of 10 GW,
which would more than triple the country’s total solar capacity.50 In January, the National Energy
Agency announced an unofficial 2015 total solar capacity target of 35 GW, up from the prior target
of at least 21 GW.51 The new 35 GW target includes 10 GW of distributed solar.52 China anticipates
reaching at least 50 GW of solar by 2020.53
5.1
Policy
In the last two years China has taken steps to boost domestic demand for solar, partly to resolve
issues of overcapacity in the domestic solar manufacturing sector. In 2010, solar was generally
seen as too expensive for the China market, and 95% of Chinese-made solar panels were for
export,54 especially to Western European countries with attractive feed-in tariffs. As prices have
come down, solar has become more competitive as an energy source. At the same time, price
plunges have caused financial difficulties at solar manufacturers worldwide, including China. In
2012 world solar demand was estimated at 20 GW, compared to 40 GW of world manufacturing
capacity, of which 20 GW was located in China.55 China’s new solar energy targets have been
viewed in part as an effort to boost demand, but in the near term these measures are unlikely to
be sufficient to resolve the overcapacity issue, and more insolvencies are anticipated.
Solar feed-in tariffs vary by geography. As a result of falling solar PV prices, the National
Development and Reform Commission recently reduced solar FITs in the sunniest regions. Tariffs
now range from RMB 0.9/kWh to RMB 1.00/kWh. As of fall 2013, the government announced
distributed PV projects will receive subsidies of RMB 0.42/kWh for all power generated, including
self-consumed power;56 such subsidies can be paid monthly.
FIGURE: 2013 SOLAR FEED-IN TARIFFS BY REGION
Source: NDRC
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5.2
Projects and key players
At the end of 2012 roughly 51% of China’s installed solar capacity was located in the four sunny
provinces of Gansu, Qinghai, Xinjiang and Ningxia.57 Ground-mounted solar projects account for
80% of solar projects in China.
FIGURE: PROVINCES WITH THE MOST ANNOUNCED SOLAR PROJECTS, MW
Gansu
Qinghai
Xinjiang
Jiangsu
Ningxia
Liaoning
Shaanxi
Shanghai
Hebei
Guangdong
Hunan
Zhejiang
Yunnan
Heilongjiang
Anhui
Jilin
Hubei
-
1,000
2,000
Existing
3,000
4,000
5,000
Planned
6,000
Source: Azure International
China’s solar players include major companies in every stage of the value chain: silicon, cells,
modules, panels, developers, power producers and service companies. Notwithstanding state
support and rising solar installation targets to promote domestic consumption, upstream
companies have struggled with market oversupply and many are now in parlous financial
circumstances. The industry is likely entering a period of consolidation, especially among cell,
module and panel makers. The victors are likely to be two or three of the strongest manufacturers
along with the major power producers that could absorb existing solar companies.
While the various solar manufacturing companies have differing levels of integration along the
value chain, the top ten firms are remarkably similar in present output capacity, between 1,000
and 3,000 MW in output capacity. GCL-Poly has a very large wafer capacity but a supply glut for
poly-silicon means much of this capacity is unused. Top Chinese solar manufacture companies are
also concentrating on novel technology research areas.
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FIGURE: TOP CHINA SOLAR MANUFACTURERS BY PRODUCTION AND TYPE, 2012
Manufacturer
Module
capacity
(MW)
Cell
capacity
(MW)
Ingot/wafer Poly-silicon
capacity
capacity
(MW)
(ton)
Yingli Green
Energy
2,450
2,450
2,450
Suntech
2,400
1,800
1,600
Trina Solar
2,400
2,400
1,200
Canadian Solar
1,400
JinKo Solar
1,300
1,200
1,200
JA Solar
2,000
2,800
1,000
Hanwha
SolarOne
1,500
1,300
800
China Sunergy
1,200
1,000
GCL-Poly
8,000
Hareon Solar
1,000
1,550
515
Source: ENF, China Securities, company information
Headquarters
Baoding, Heibei
Wuxi, Jiangsu
Changzhou, Jiangsu
Suzhou, Jiangsu
Shangrao, Jiangxi
Shanghai
Shanghai
Nanjing
65,000 Hong Kong
Jiangyin, Jiangsu
Web site
http://yinglisolar.com
http://suntech-power.com
http://trinasolar.com
http://www.canadiansolar.com
http://www.jinkosolar.com
http://www.jasolar.com
http://www.hanwhasolarone.com
http://www.chinasunergy.com
http://gcl-power.com
http://hareonsolar.com
China’s major solar power developers are almost all either large state-owned enterprises, mainly
in the energy sector, and large renewable energy players such as Longyuan and Suntech. The
relative rankings of these players are likely to change substantially over the next two years as
China’s solar build-out accelerates.
FIGURE: TOP 14 CHINA SOLAR DEVELOPMENT COMPANIES BY 2012 INSTALLED CAPACITY, MW
China Power Investment Corp
China Energy Cons. & Env. Protection
Datang Group
Guodian Power
China Guangdong Nuclear
CHNT
Longyuan
China Aerospace
Ningxia Electric
Huadian
Suntech
SDIC
Beijing Energy Investment
China Huaneng
-
200
400
600
800
Source: Azure International
5.3
Future strategy and potential cooperation
Collaboration between Dutch and China in PV depends strongly on the state of the world solar
market. While Chinese solar demand is rising due to favorable policies, worldwide oversupply of
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Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
PV cells, modules and panels continues, leading to expectations of industry consolidation and
near-term reduced manufacturing output. Chinese consolidation has already taken place, and
more is likely.
At the technology level, the most logical starting point for cooperation and collaboration is the
12th Five-Year Plan for the Chinese solar industry, which lays out priority areas for sector
development.58 These research and development areas are as follows:








High purity silicon: the plan calls for breakthroughs in “purification, high-efficiency
nitrogen recovery and purification, high-efficiency chemical vapor deposition, and …
utilization of poly-silicon by-products.” The plan also calls for large-scale production to
reduce energy consumption below 120 kWh/kg. The acquisition of Elkem appears aligned
with this goal.
Silicon ingots/wafers: The plan calls for reducing silicon waste, increasing efficiency of
silicon usage, developing quasi-single crystal technology and reducing cutting thickness to
below 160 microns.
Crystalline silicon: The plan focuses on “low-reflectivity texturing technology, selective
emitter technology, electrode alignment technology, plasma passivation technology, lowtemperature electrode technology, and full back junction technology.”
Thin-film cells: The plan lists a variety of R&D areas including: laminated and multijunction thin-film cells, reduced degradation, roll-to-roll production techniques for flexible
silicon-based thin-film solar cells, copper indium gallium (di)selenide (CIGS) and organic
thin-film cells, non-vacuum CIGS thin-film cells, magnetron sputtering cells, and vacuum
co-evaporate cells.
High-concentration solar cells: Among other areas, the plan proposes to develop 500x
concentrating solar systems, and PV cells that can reach 35% (non-concentrated)
conversion efficiency (40% under concentrated conditions).
Building-integrated PV: The plan advocates “building materials that can be directly
integrated into buildings, double-glass BIPV modules and insulating glass components that
are applied to factory rooftops, agricultural greenhouses, and curtain walls.”
Specialized PV production equipment: The plan advocates localization of technologies
including large-scale silicon ingot and module automation as well as chemical vapor
deposition and other thin-film processes.
Ancillary materials: The plan promises to localize “production of crucibles, high-purity
graphite, high-purity quartz sand, carbon-carbon composite materials, glass, ethylenevinyl acetate copolymer (EVA), backplane, electronic paste, and line cutting fluid.”
Given the advanced state of the Netherlands chemical and basic materials sectors, and ongoing
innovation in these areas, basic research on advanced solar PV appears to be a major area of
potential collaboration with China. Scientific research collaboration through the Netherlands’
research base, in connection with companies or research institutions in China, is promising, though
Chinese firms may need additional incentives to support Dutch research. In addition, acquisitions
and consolidation will no doubt continue to speed the integration of the world’s crystalline silicon
PV solar industry, with Chinese solar manufacturing and development firms taking the lead.
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Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
6
6.1
Smart grids
Policy
China’s smart grid development plan is one of the most comprehensive and capital intensive in the
world. Suppliers looking to participate in China’s smart grid market will primarily deal with China’s
two main transmission and distribution operators, the State Grid Corporation of China (SGCC) and
China Southern Power Grid Company (CSG), which respectively control roughly 80% and 20% of
the nation’s T&D resources.59 Historically, State Grid has taken the lead in smart grid planning and
development with CSG following suit.60
In 2009, the State Grid Corporation of China (State Grid) released an RMB 3.5 trillion investment
plan called the strong and smart grid. The 11-year plan focuses on building high-voltage
transmission, but includes RMB 384 billion for smart grid solutions, particularly user-sited
equipment such as meters, dispatch equipment, and distribution substations.61 As a part of the
plan, China has undertaken pilot projects and demonstration projects in a variety of high
technology smart grid areas. A number of foreign technology providers have been able to establish
cooperation partnerships to participate in smart grid development. Furthermore, China is leading
in certain aspects of the grid-scale energy storage market, especially in the area of renewable
integration. China’s Zhangbei project, which includes solar, wind and energy storage, is the largest
such hybrid plant in the world.62
Since State Grid first introduced its Strong and Smart Grid Development Plan in 2009, its stated
investment levels and installation goals have been revised several times. These changes reflect
new priorities and resistance from the central government on State Grid’s UHV transmission
development plans.63 From 2009-2020, the total smart grid investment is expected to reach RMB
3.8 trillion. According to a report released by State Grid in February 2013, during the 12th FiveYear Period (2011-2015) State Grid will invest RMB 1.6 trillion into grid expansion and upgrades,
with RMB 286 billion—approximately 18%—going toward smart grid projects.64 The smart grid
investment will be evenly divided between transmission and distribution level projects. 50% of
distribution level investment will go towards rural electrification projects.65
6.2
Projects
Smart grid project development in China spans the spectrum from early stage research and
development to full-scale technology implementation. On the research and development side of
the spectrum, both State Grid and China Southern Grid have invested significant time and money
into producing and vetting technologies, ranging from MW-scale energy storage systems to 1000
kV UHV direct current (DC) transmission. On the full-scale installation and implementation side,
State Grid and China Southern Grid have made significant progress with smart meters and EV
charging infrastructure deployment. On both sides, a great deal of emphasis has been placed on
the development of standards to support the smart grid: by 2015, State Grid aims to develop 93
standards across the value chain.66
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Zhangbei National Wind Solar and Energy Storage Demonstration Project
This pilot project calls for 100 MW wind, 40 MW solar and 20 MW energy storage. Primarily an
engineering test bed, the Zhangbei project was designed to test dispatch methodologies for a
combined energy storage and renewable energy generation system. As of May 2013, 16 MW of
energy storage are currently in operation, featuring 14 MW/63-MWh of lithium iron phosphate
battery systems from four Chinese suppliers and one 2 MW/8-MWh vanadium redox flow battery
from Prudent Energy. The project has a stated phase one investment of RMB 8 billion.67 China EPRI
is currently planning the next phase of this project.
Jindongnan-Jingmen UHV AC 1000-kV Demonstration
Built in 2009, this 640 km line was State Grid’s first proof of concept for its ambitious UHV AC
plans. This line, which has a rated capacity of 5 GW, serves as a critical connection between
China’s North and Central power grids. However, lower than expected performance and higher
than expected costs from this first project has caused China’s national government to reconsider
its UHV plans.68 Since the completion of this project, only two other segments have been approved
by the NDRC, well behind the schedule original laid out in State Grid’s 2009 Strong and Smart Grid
Plan.69
Smart Substation Project
As of September 2011, China State Grid had 74 digital stations either currently operating, under
construction, or in the planning phase, 11 of which are at the 500-kV level.70 By 2015, all smart
substations should be operational. State Grid plans to build 11 at the 500-kV level, four at the 330kV level, 22 at the 220-KV level, 32 at the 110-kV level and five at the 66-kV level. An important
aspect of these projects has been the adoption of unified standards: all of these projects utilize the
IEC61850 protocol.
Distribution Automation
China State Grid has established automated distribution systems in 23 municipalities and plans to
expand to 53 in 2013.71 Distribution automation projects are primarily designed to address
reliability and voltage issues in 35 kV and under networks. Through better monitoring and
automated switchgear, Chinese grid operators can significantly lessen the scope and duration of
power outages in rural grids, which average over 20 hours a year nationally.
Nationwide Smart Meter Deployment
China has been installing smart meters at a pace of 50-60 million a year. Unlike U.S. and European
markets, many of these meters are AMR-type one-way communication devices that have limited
functionality. GTM Research predicts that 300 million meters will be installed by 2015, with the
average price of a residential meter being US$ 26. The Yuanta Group estimates that the smart
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Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
meter market will be worth RMB 53 billion by 2020, with RMB 12 billion going toward three-phase
meters for commercial and industrial loads and RMB 42 billion for single phase meters.72
Intelligent Communities Projects
State Grid planned to establish 25 intelligent buildings/communities by 2011, with initial pilot
projects occurring in Beijing, Chongqing, Hebei and Shanghai.73 These communities utilize two-way
communication devices that pave the way for demand response applications. However, due to flat
electricity rates for residential power consumers and limited consumer engagement, it is unclear
how State Grid will use these initial pilot projects to create a commercial market for residential
demand side management.
Micro-grid Deployments
Although not explicitly defined in the Strong and Smart Grid plan, micro-grid deployment has
become a significant emerging trend in China. The central government has called for 130 projects
by 2015. These projects-like the Sino-Singaporean Tianjin Eco-city Project that features a 2 MW
lithium ion BESS-are important technology testing platforms for energy storage and small-scale
renewable energy resources. Thus far, a majority of projects have been developed in rural and
island locations.
6.3
Key players
Domestic suppliers currently dominate the UHV transmission, transformation and smart meter
markets.
FIGURE: CHINA DOMESTIC SUPPLIERS
Company
Name
Wasion
Group
Huawei
XJ Electric
BYD
Main Business
Leads the smart meter market. Works with Siemens and Cogo Group to offer higher-end
AMR and AMI products
Huawei has partnered with State Grid to lead the communication equipment market with
offerings covering the entire grid-from generation to end-user, comprehensively called its
74
“One Net” solution
This transmission and distribution equipment supplier is majority owned (60%) by State
Grid. It is expected to continue to be a key supplier for transmission and distribution
75
substation projects. It was one of the top five smart meter suppliers in 2010
BYD is a key player in both the electric vehicle and energy storage markets.
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International leading transmission and generation infrastructure companies have targeted the
Chinese smart grid market with varying degrees of success.
FIGURE: INTERNATIONAL SUPPLIERS
Company
Name
ABB
Siemens
GE
Main Business
ABB has been in the Chinese market since 1974 and supplies a range of transmission and
distribution equipments. In 2012, ABB’s China sales reached US$ 5.2 billion. Recently, ABB
has seen its UHV DC market share diminished by domestic suppliers who have developed
their own thyristor technology but it continues to expand into related markets, like building
energy management.
Siemens first entered the Chinese market in 1872 and has had strong ties ever since. In
76
2012, Siemens China sales topped US$ 8.2 billion. Siemens is aiming to capitalize on
China’s urbanization trends, supplying smart logistics services, building energy management
systems and distribution level grid infrastructure.
GE has participated in a number of smart grid collaboration projects in China. In January
2010, it formed a smart grid demonstration center with Yangzhou Beichen Electrical
77
Equipment Company, a subsidiary of SGCC. GE is bringing a wide array of smart grid
solutions to the Chinese market, including wireless smart meters, residential demand energy
management, automated outage management systems, network software and EV
management systems.
Joint ventures have reemerged as the preferred way for foreign technology providers to enter the
Chinese market. Recently announced joint ventures have focused on information management,
smart metering and energy storage segments.
FIGURE: JV SUPPLIERS
Company
Name
Atos Origin
Echelon
ZBB Energy
Siemens
ABB
6.4
Main Business
Formed JV in May 2011 with telecom equipment provider ZTE to deliver smart meter
78
management and other IT solutions for the electric power industry.
Formed JV in March 2012 with Holley Metering to target the smart meter market.
79
Formed JV in September 2011 with Xinlong Electrical and Wuhu Huarui Power to target the gridscale energy storage market.
Announced JV in September 2012 with Wasion Group to target smart meter data management
80
and analysis segment.
Formed JV in September 2011 with State Grid Nanjing Automation to research, develop and
produce transmission and distribution level equipment.
Future strategy and potential cooperation
China’s large smart grid market appears to offer several niches where collaboration with other
countries would benefit market development:

There are prospects in demand side management but not demand response. Motivated by
energy intensity reduction goals, increased adoption of time-of-use rates at commercial
and industrial loads as well as the prospect of growing power shortages, there remains a
significant opportunity to participate in the end-user segment of the smart grid market
through software, monitoring and services.
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Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013


Data management, analysis and visualization: A number of foreign technology companies
have technology offerings to contribute to this segment; however, a primary concern for
the national Chinese government will be data security. While there will be opportunities to
participate at the municipal and provincial level, it is highly unlikely that foreign firms will
be able to manage this sensitive information at the national scale.
Energy storage and EV technology are promising but both fields have yet become fully
commercial markets, so companies will likely have to partner with Chinese firms to
participate in government supported demonstration projects.
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Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
7
Energy storage
In 2012, China’s electrical grid will become the largest in the world in terms of both installed
generation capacity and electricity produced. China also possesses the world’s largest installed
wind power base and the world’s largest declared investment in renewable energy. These facts
alone suggest that China is also the most attractive market for energy storage in the world, even
though China currently has just 4% of the worldwide energy storage capacity. However, energy
storage is a new technology that requires new market mechanisms to fully realize its potential to
transform the power sector. There is significant precedent for such technology-driven shifts in
industrial development. And given China’s rocket-like ascent to global cleantech energy leadership,
it is reasonable to predict that China will help lead a global paradigm shift that establishes energy
storage as a normal and ubiquitous component of our energy generation and distribution systems.
7.1
Policy
Economic viability of grid energy storage depends on the structure and pricing mechanisms of
power markets and public policies, which are deeply interrelated. The current design and structure
of China’s power markets make energy storage economically unviable in several respects. Current
wholesale pricing mechanisms are failing to incentivize investment in load-following capacity,
ancillary services and even power generation. For instance, total compensation for ancillary
services is less than a tenth that of the U.S., wholesale power prices generally do not vary during
the day, and time-of-use (TOU) pricing is at the pilot stage in China. This limits energy storage for
load-leveling and peak-shaving to a few cases. Because the magnitude of the wholesale, retail, and
ancillary services market reforms that would be needed to make storage attractive in the near
term, storage may find the most attractive growth opportunities in provinces with reform pilot
programs, and in situations where storage has received direct policy support through subsidies,
targets, or demonstration projects. China already has a number of direct policy supports for
energy storage. However, these will take time to show results given the early stage of the market,
the risk-averse nature of utility sector investors, and the need for longer utility experience with
storage before it can cross the inflection point of rapid adoption.
Over the last several years, the central government has released a number of policies with direct
implications for energy storage in China. Much of China’s political process revolves around FiveYear Plans that set goals and agenda priorities for all levels of government. China's 12th Five-Year
Plan includes a number of items related to alternative energy technology and policy.
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FIGURE: NATIONAL POLICIES RELATED TO ENERGY STORAGE
Policy
Issuing Ministry
Year
Content Summary
PRC State
Council
2006
Within the new energy materials section, it calls for the
development of energy storage materials and systems. It
also calls for the development of energy storage to aid
the development of distributed generation.
The Standing
Committee of
the National
People’s
Congress
(NPCSC)
State Grid
2010
Energy Storage mentioned as an enabling technology.
2011
These technical guidelines apply to all provinces under
State Grid control. They apply to energy storage in parts
of the grid operating at 35 kV or below.
NDRC
2011
National 12th
Five-Year
Science and
Technology
Development
Plan
MOST
2011
Priority
Development
Guide for Hightech Industries
(2011)
NDRC, MOST,
MIIT, MOF,
State
Intellectual
Property Office
2011
The most important section of the catalogue, the
encouraged articles, contains six articles related to
energy storage. These articles can be classified into four
categories: grid scale energy storage development and
application, energy storage systems for light rail and
regenerative braking, energy storage systems for electric
vehicles (battery materials, separators, management
systems and charging) and light engineering applications
of energy storage.
This plan lists renewable energy, smart grid and electric
vehicle industries as key strategic industries. As a
supporting technology, energy storage is listed as a
strategic developing field—a government supported
technology. For strategic fields, like energy storage,
further development of core technology is the primary
goal.
This guide identifies 137 technologies within ten
industries that are to receive stronger support and
government focus. The goal of the Priority Development
Guide for High-tech Industries (2011) is to promote
industrial restructuring in order to align China’s
industrial development with its new energy and
environmental goals. This 2011 release builds upon the
original 2007 policy.
Long-term
Scientific and
Technological
Development
Plan 2006-2020
Renewable
Energy Law,
Amendment
Technical
Guidelines for
Connecting
Energy Storage
in the
Distribution
Network
Guiding
Catalogue of
Industrial
Structure
Development
for 2011
Source: CNESA and Azure International
Most of the policies mentioned are related to China’s industrial planning process. These policies
contain guiding principles, or suggestions, intended to instruct provincial and city-level
governments developing their own development plans.
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7.2
Projects
Unlike in other countries, China’s grid energy storage market has developed with a focus on
renewable energy integration, load-shifting and peak shaving. Whereas other countries have
focused on power quality, ancillary services and similar applications. China is currently entering
the demonstration phase of development for most energy storage technologies, and will take time
to accumulate the experience and capabilities necessary to enter full commercialization. China has
only a small number of energy storage companies currently active, though this should change
rapidly once the market takes off. This report includes our forecasts for capacity and annual
demand for various energy storage applications and technologies. Pumped hydro storage is
forecast to double or triple by 2016 to 40-60 GW installed, while other storage technologies are
forecast to rise from currently insignificant levels to over 750 MW installed by 2016.
According to Yu Zhenhua, Chairman of the China Energy Storage Alliance, China’s energy storage
industry is just entering the demonstration phase.81 Over the next several years, the Chinese
government will need to support the development of the Chinese energy storage industry through
a number of demonstration projects, covering an increasingly diverse set of applications and
technologies. Almost all the industry players interviewed for this report echoed this sentiment.
The Chinese government has already supported to several demonstration projects. The first phase
of the Zhangbei National Wind Solar and Energy Storage Demonstration Project (100 MW wind, 40
MW solar and 20 MW energy storage) will begin full operation in the summer of 2012, once the
last 6 MW of energy storage are installed. The second stage calls for the project to increase to 300500 of MW wind, 100 MW of solar and 110 MW of energy storage. In Guangdong and Hunan, two
10 MW energy storage demonstration projects are currently under development (4 MW of the
first project and 2 MW of the second project are already in operation).In addition to these largerscale demonstration projects, a number of small PV integration and micro-grid demonstration
projects began operation in 2011, primarily in rural and remote grid locations.
7.3
Key players
This section profiles the top 20 energy storage manufacturers in China. The content is based on
Azure International’s investigation and interviews with producers of lithium ion batteries, flow
batteries, lead acid batteries and flywheels. The information is presented in alphabetical order by
company name.
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FIGURE: OVERVIEW OF COMPANIES
Technology
Year Founded
Production
Capacity*
Revenue
LFP. Li-polymer
1999
2013E: 5 GWh
2013E: US$ 3.2
billion
Anhui Meineng
ZnBr Flow
2011
2012E: 200 MWh
-
Boston Power
LiCoMn
2005
2012E: 400 MWh
Company
ATL
-
LFP
1995
2013E: 4 GWh
VRB Flow
2006
2012E: 500 MWh
LFP
2007
2012E: 576 MWh
LFP, Li-polymer
2001
2012E: 120 MWh
MGL
NCM, LCO
2000
2012E: 6.5 GWh
2011: US$ 7.7
billion
2013E: US$ 284
million (VRB only)
2011: US$ 14
million
2011: US$ 219
million
-
Dalian Rongke
VRB Flow
2008
2012: <100 MWh
-
Desay Battery
LFP, Li-polymer
1983
-
Sail Battery
Pb-Acid, Li-ion
1958
2011: 3.5 GWh PbAcid
2011: US$ 362
million
2011: US$ 635
million
VRB Flow
2003
-
-
Horizon Haode
Adv. Pb-Acid
2011
2012E: 550 MWh
-
Tianjin Lishen
LFP
1997
2011: 1.5 GWh
VRB Flow
2009
2010: 12.5 MW
2011: US$ 295
million
-
LFP
2008
2011: 832 MWh
-
Pb-Acid, NiMH, Liion
1982
2011: 7.6 MWh LFP
-
Wanxiang
LFP
1969
2012E: 2.5 GWh
2010: US$ 10.4
billion
Yingli Solar
Flywheel
1987
2015E: 50 MW
-
2013E: 2.5 GWh
2014E: US$ 7.8
billion
BYD
Chengde Wanlitong
CALB
China BAK
Golden Energy Fuel
Cell
Prudent Energy
RealForce
Huanyu
Zhuhai Yintong
LTO
2004
Note: Information based on manufacturer interviews and published company information.
* Some figures based on overall business while others are based on energy storage segment only.
Source: Azure International
Only a handful of Chinese energy storage manufacturers have participated in large-scale
demonstration projects. Among Chinese energy storage developers, BYD and Prudent Energy
stand out as the only companies with large-scale project both in China and abroad. Sail Battery,
China’s leading Pb-Acid battery manufacturer, stands out due to the sheer number of small-scale
projects that have incorporated its Pb-acid cells.
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7.4
Future strategy and potential cooperation
China has a unique need for energy storage technology. As energy storage technology is still in
early stage, there are great opportunities for international companies to provide advanced
technology and room for the cooperation between China and other countries are enormous.
Government policy will likely drive the China energy storage market over the next few years, so
government plans for the industry essentially set the terms for attractive areas of international
cooperation. The National Energy Administration’s National Energy Technology 12th Five-Year Plan
identifies key energy storage technologies and calls for a number of specific R&D and
demonstration projects:





10 MW large-scale supercritical compressed air energy storage demonstration
MW-scale flywheel energy storage demonstration project
MW-scale superconducting magnetic energy storage (SMES) project
MW-scale NaS battery demonstration project
MW-scale flow battery demonstration project
Energy storage R&D and associated development goals include the following:






Develop metal-air and other new advanced battery technologies
Develop enabling technologies for large-scale supercritical compressed air energy storage
Further develop ion exchange membranes for flow batteries
Establish a platform for the development of technology and engineering standards
Create a stronger system for energy storage intellectual property protection
Establish greater international communication and cooperation for new technology
development
While the NEA’s policy demonstrates strong government support for the development of energy
storage, it does not contain details concerning how these projects are to be financed. As such, the
above goals should be viewed as an industry development wish list rather than as binding
government commitments to the energy storage industry.
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8
8.1
Bio-energy
Current Status and Trends
China's bio-energy production to end users experienced dramatic growth from 160 PJ in 2000 to
more than 1500 PJ in 2010, and it is expected to further double during the 12th Five-Year Plan
period (2011-2015). Bio-energy production accounted for around 0.6% of China's total energy
consumption at 3.62 billion tons of standard coal equivalent in 2012.82 Power generation from
biomass is about 38 TWh in 2012, contributing around half of the total bio-energy production,
followed by biogas production of 16 billion m3, mostly through anaerobic digestion with
household-scale systems.83
FIGURE: BIO-ENERGY PRODUCTION IN CHINA 2000-2015
Source: NEA
Bio-energy policies have several objectives: promoting clean energy, mitigating energy shortages,
diversifying energy supply, accelerating the industrialization of agriculture, and improving rural
living standards. Under the 12th Five-Year Plan, the annual utilization of bio-energy will exceed 50
million tons of standard coal equivalent, and annual output value will reach RMB 150 billion.84
8.2
Gaseous bio-energy
As early as the 1970s, to solve energy shortages in its vast rural areas, China promoted biogas
technologies and utilization. By the end of 2010, 40 million rural households were using biogas,
with the total annual production volume reaching 13 billion m3, and another 1 billion m3 of biogas
was generated from 50,000 livestock and poultry farms.85 In 2012 total biogas production was 16
billion m3.86 The 2015 target is 22 billion m3, excluding biogas-to-electricity.
Distributed household digesters in rural areas account for more than 85% of the total biogas
production. The substrate used for digestion is mostly manure from family-raised livestock, as well
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as human excrement. The average capacity is 8-10 m3 and the biogas produced is mainly used for
cooking and lighting. To encourage the adoption of household biogas systems, the national
government provides subsidies of RMB 1300-3500 per installation.87 Biogas production from
livestock and poultry farms is growing faster than that from household systems, as fewer peasants
raise pigs individually and more are raised at larger farms. While initial projects in the 1980s and
1990s focused on rural applications below 1 MW thermal capacity, current developments are
increasingly focused on larger scale developments for power production in the range of 5-15 MW
electric capacity, a trend that should continue.88
8.3
Liquid bio-energy
Currently liquid bio-fuel accounts for less than 0.5% of China's transportation fuel, with 1.8 million
tons of bio-ethanol and 0.5 million tons of bio-diesel produced in 2010.89 China initially promoted
biofuel under the 11th Five-Year plan (2006-2011), but later bio-fuel market demand dropped and
bio-fuel manufacturing experienced over-capacity.
The 12th Five-Year Plan on Renewable Energy raised the target of liquid bio-fuel utilization to 5
million tons, including 4 million tons of ethanol and 1 million tons of biodiesel in 2015.90 New
production of ethanol will come from sorghum and cassava. The main sorghum regions are
Heilongjiang, Inner Mongolia, Shandong and Jilin, while 90% of cassava resources are located in
Guangdong and Guangxi.91 Bio-diesel production will be mainly from waste kitchen oil and waste
animal oil.
China has technical standards for bio-diesel blending with diesel and ethanol blending with
gasoline, but lacks national-level mandatory requirement for bio-diesel sale and use.92 Preferential
tax subsidies exist for bio-diesel and bio-ethanol sale and production, but not for end user
consumption.93 However, since 2012 China has discouraged bio-ethanol from food-crops and
hence reduced direct subsidies and increased VAT in some areas.94
Bio-ethanol: In the 12th Five-Year Plan, China aims to increase the bio-ethanol production to 4
million tons in 2015, versus 1.8 million tons in 2010. Beginning in 2002, China developed its bioethanol industry to deal with over 100 million tons of rotten grains that China had stored for food
security reasons. However, the Ministry of Agriculture (MOA) in 2007 released a biomass industry
plan stating that bio-energy development cannot compete with food and arable land resources,
shifting focus to next-generation technologies such as cellulose-derived ethanol.95
Bio-diesel: The target for bio-diesel production in the 12th Five-Year Plan is 1 million tons in 2015,
doubling the production in 2010. China started bio-diesel development in the 9th Five-Year Plan
period (1996 to 2000). MOST listed R&D on bio-diesel as part of the national 863 Plan.96 The three
oil giants in China—CNPC, Sinopec and CNOOC—have each developed their own bio-diesel
demonstration projects in Sichuan, Guizhou and Hainan, respectively, using Jatropha as the raw
material. So far only the 60,000-ton production line in Hainan, developed by CNOOC has been in
operation, whose technology provider is the University of Sichuan.97 Sichuan Gushan, Hainan
Zhenghe and Fujian Zhuoyue have established a production line of 10,000-20,000 tons annual
capacity, using kitchen waste oil and acidic oil.98 Tsinghua University, China Research Institute of
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Petroleum Processing, Zhejiang University of Technology, and Beijing University of Chemical
Technology are conducting independent research on bio-diesel technologies, such as low-cost
enzyme for bio-diesel from animal and vegetable fat under room temperature, the synthesis of
diesel from non-edible plant oil and from micro-algae.99
8.4
Solid Bio-energy
8.4.1 Solid Biomass to Electricity
China generates a significant amount of power from bio-energy and the country has set targets
which specified the target of power generation capacity from biomass at 5.5 gigawatts (GW) in
2010 and 30 GW in 2020.100 The target for 2015 is 13 GW, including 8 GW from agricultural and
forestry biomass, 2 GW from biogas, and 3 GW from solid waste incineration, and the annual
power generation from each source is 48, 12 and 18 terawatthours (TWh), respectively.101 The
Renewable Energy Law requires grid companies to purchase 100% of power produced from
covered sources, and includes an RMB 0.25 per kWh Feed-in tariff (FiT) established for biomass
power delivered to the grid above the local price for coal power of an average RMB 0.4 per
kWh.102 This is further boosted by a FiT of fixed total RMB 0.75 per kWh for using agriculture and
forestry biomass since late 2010, replacing the previous RMB 0.25 per kWh premium subsidy.103
Table: China's Biomass-to-Electricity Development (2010-2015)
Power Generation
(TWh)
Installation (GW)
2010
2011
2012
2015
target
2010
2015
target
Ag/forest
3.6
4
-
8
-
48
MSW
1.7
1.7
-
3
-
18
Biogas
0.2
0.2
-
2
-
12
Total
5.5
5.9
9.12
13
33
78
Direct combustion in dedicated biomass power plants: China has mature technologies of biomass
power generation under high temperature and pressure conditions. Guangdong Yuedian Group
brought world's largest biomass power plant online in November 2011, installing two 50 MW
capacity units using fluid-bed technology and agricultural and forest residue as feedstock.104 In
addition, Wuhan Kaidi Electric has developed three biomass power projects, which were all
operational by May 2012, using a high-temperature and ultra-high pressure circulating fluid-bed
boiler.105
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Municipal Solid Waste-to-Energy: China produced about 221 million tons of municipal solid waste
(MSW) in 2010, with annual growth of 8-10%.106 In 2010, between 77% and 80% of MSW was sent
to landfills.107 However, due to the rapid growth of MWS generation, existing landfill sites are
estimated to be full in recent 3-5 years.108 To solve this problem, Chinese government is promoting
incinerating MSW for power generation. The national incineration capacity is planned to grow
from 89,600 tons daily in 2010 (32.7 million annually) to 300,000 tons daily (109 million tons
annually ) by 2015, an implied annual growth rate of 27%. This implies that in 2015 one third of
MSW will be incinerated for power generation.109
However, because China lacks an effective MSW separation system, Chinese MSW has a high
water content, and incineration is usually incomplete. It is estimated that about 20% of residues
(by weight) are produced after incineration, which still needs to be landfilled. Moreover, toxic flue
gas, especially dioxin, causes severe health issues to residents surrounding the plants.110
8.4.2 Solid Bio-fuel Boilers
The utilization of solid biomass is minimal. In 2010, only 3 million tons of briquettes were used for
heating boilers and as bio-charcoal.111 For briquetting, the currently wide-applied solid biomass
briquette manufacturing equipment in China is of small capacity at one ton per hour. The annual
production is about 280,000 tons, accounting for over 90% of the total production. For large-scale
industrial use, China has imported more than 20 large biomass compression molding production
lines. By the end of 2008, China had completed 102 biomass solid molding factories in Beijing,
Liaoning, Heilongjiang, Sichuan, Shandong, and Henan.112 For combustion, there are about 400,000
biomass stoves in China in 2009.113 Small-scale biomass stove and boiler technology developed
rapidly after the release of the Renewable Energy Law in 2006.
8.5
Conclusions
Because of the size of the Chinese market and the many existing policies to promote bio-energy in
all its forms, all areas of bio-energy have some appeal for international collaboration. There are
three broad areas with particular attraction for collaboration between the two countries: (1)
Biomass-to-electricity, including biomass co-firing with coal as well as MSW-to-electricity are areas
where the Netherlands has broad experience and where China is beginning increase the scale of
power plants. Given the diversity of biomass-to-electricity projects and technical engineering
difficulties entailed, it is likely many companies will need to cooperate to make efficient use of this
resource over the long term. (2) Currently China has some domestic gas upgrading technologies,
but their high cost makes the market potentially appealing for foreign manufacturers. Flue-gas
cleaning is widespread in Chinese factories but the quality is relatively low and operational issues
suggest ample room for improvement. Improved gas cleaning could also benefit MSW plant
operation. (3) Cellulosic ethanol and algae-based biofuels appear to offer long-term promise as
transportation fuels. Since research institutes in both China and the Netherlands are actively
developing cellulosic ethanol and algae-based biofuel technologies, collaborations are already
underway, and these links will likely continue to deepen.
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9
Investment trends in and out of China
China and the Netherlands: the two countries have dramatic differences in population, growth and
development. What they have in common is a desire to develop clean energy technology and
bring such technology to the global marketplace. The Netherlands stands to benefit from a
number of trends in China cleantech outbound investment.
After China initiated the outbound investment strategy as a part of national policy in 2000, the
country gradually picked up the pace of global investment, with an emphasis on a small number of
markets (such as North America) and a narrow focus on resource acquisition, particularly in oil, gas,
copper, iron and steel. With the most recent 12th Five-Year Plan, it is clear that this focus has
shifted towards giving much more attention to technology at the national level. At the company
level as well, Chinese corporate investors are looking to M&A and investment in more complex
ways. New motives include gaining management talent, scientific knowhow, engineering
experience, solid brands, and technology or market synergies.
9.1
China outbound deals focus on Strategic Emerging Industries
China’s economic rise has been attended by enormous ecological consequences, but at the same
time China’s government has successfully prioritized clean and renewable energy, in the process
transforming the country into a cleantech industrial powerhouse. China’s renewable energy is
spurred by government targets, subsidies, low-cost loans from state-owned banks, and most
particularly the set of industries defined as Strategic Emerging Industries, SEIs, in China’s 12th FiveYear Plan. The majority of the SEIs have a clean energy component, including obviously new
energy, energy savings and environmental protection, and new energy vehicles, but also to a
lesser extent next generation IT (such as advanced meters), advanced materials and advanced
manufacturing.
Within these SEIs, the government has established remarkably specific goals for technology China
should have mastered. Investment, international cooperation and acquisitions are all explicit
methods for acquiring mastery in strategic fields, which is reflected in recent dealflow. For
example, the Hanergy acquisition of Miasole (a U.S.-based thin-film developer) and the Wanxiang
acquisition of A123 appear clearly aligned to acquire technologies in SEIs.
China’s support for outbound foreign investment is highly selective. Policy changes related to
outbound investment are, in general, not designed to liberalize the market. Instead, they are
designed to expand markets for Chinese companies and acquire technology and knowhow for
important industries. Industries falling outside the government’s defined scope may struggle to
attract investment. Market openness is also a concern. Although senior Chinese policy-makers
have said that foreign companies would be able to participate on equal terms in Strategic
Emerging Industries, domestic companies are often given preference.114
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9.2
China outbound investment is growing, both for M&A and VC/PE
China’s outbound M&A activity reached a record high in 2012 as Chinese enterprises continued to
seek deals abroad, especially in the energy and resources sectors. From 2008-2012, Outbound
M&A grew at an average CAGR of 58%. State-owned enterprises (SOEs) provided a majority of the
investment, accounting for 83% of deal value, while private firms accounted for a majority of the
deals, 73% of total deal volume.
FIGURE: CHINA OUTBOUND M&A 2008-2012
250
70
Value (left axis)
50
150
40
30
100
Number of Deals
Deal Value (US$ Billion)
60
Deals (right axis)
200
20
50
10
0
0
2008
2009
2010
2011
2012
Source: PWC, Azure
2012 was a slow year in terms of fundraising and investment in China. Domestic investment
dropped from 362 deals worth US$ 6.2 billion in 2011 to 202 deals worth US$ 3.7 billion in 2012.
Fundraising also fell well short of 2011’s historic highs, the total value of new USD-denominated
funds fell 36% from 2011 to 2012.
Market inhibitors in 2012 may become market drivers in 2013. A number of disappointing IPOs in
early 2012 forced many VC-supported firms to enter a holding pattern. In 2012, there were 98 IPO
exits compared to 171 in 2011.115 IPO activity should increase in 2013, bolstered by recent
upswings in global stock exchanges and built up backlog. In addition, overcapacity in global solar,
wind and LED industries has also created a buyer’s market for firms looking to acquire resources
and next generation technologies.
Government support and the global economic environment are encouraging outbound
investment. Since 2010, the Chinese government has now officially prioritized outbound
investment over inbound direct investment. 116 A number of recent changes to outbound
investment regulations have expedited the outbound investment approval process while opening
up investment to high net wealth individuals. This will enable private investors-the fastest growing
outbound investor class-to pursue more deals abroad with less government oversight.
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9.3
The geography of investing is shifting
Even as recently as five years ago, China foreign outbound investment was essentially limited to
North America, Asia and one or two deals elsewhere, typically in the developing world. The focus
at that time was also clearly on resource acquisition. Given China’s need to diversify foreign
exchange holdings and the need for major SOEs to diversify their businesses globally, it is unlikely
that big-dollar dealflow will taper off. Instead, what has already happened is that deals are
diversifying, particularly in terms of geography.
Chinese cleantech companies looking to boost margins are actively pursuing a policy of vertical
integration, expanding into both upstream and downstream segments of the value chain. This
expansion is not only motivated by profit margins but also the fact that high labor inflation is
eroding Chinese companies’ major competitive advantage—low cost manufacturing.
Although many Chinese cleantech firms have established good reputations regarding their
technology, they need to improve their sales and service capabilities. To succeed in foreign
markets, renewable firms, particularly solar firms, need to learn how to function in a fragmented
market that places more emphasis on quality of service. Downstream investments and acquisitions
will focus on new sales channels and service networks. Established cleantech manufacturers will
require a stronger on the ground presence in foreign markets to provide proper distribution and
after sale services. In developed markets this can be pursued through acquisitions of local
companies with strong sales support networks and brand recognition. In developing markets,
Chinese firms will look to establish manufacturing and build new brands. Upstream acquisitions
will focus on technology and manufacturing advances.
9.4
Private companies are coming to the fore
Private firms are driving outbound investment growth. Private firms set new records in terms of
absolute deal value and percent of overall investment in 2012.117 Private investment growth
continues to gain on state-owned enterprise investment with private M&A deals accounting 39%
of deal value in 2012 compared to 22% of deal value in 2011.118 Although private firms are subject
to more rigorous approval processes, they have several advantages over SOEs in the global M&A
market. Private firms are less bureaucratic and are more motivated by commercial interests. Many
private Chinese firms have foreign stock market listings, giving them better access to offshore
capital markets and more transparency.119
Another encouraging sign is the size of deals. Although the average deal size by year for outbound
investments ranged widely between a low of US$ 21 million in 2003 and a high of US$ 489 million
in 2009, the largest number of deals from 2002-2011 fell into the range of US$ 1-10 million.120
According to a recent Deloitte survey, of 69 M&A practitioners surveyed, 78% expect average
outbound M&A deal size to be less than US$ 300 million.121
9.5
China’s cleantech investing interests diversifying
Looking purely at the venture capital segment of China’s investment sector, it is clear that the
focus on new technology is rapidly diversifying to new sectors of cleantech. Early on, just a few
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sectors attracted interest in terms of funds invested, particularly waste and water treatment and
solar. Solar investments led the industry several years ago but are now largely ignored, reflecting
overcapacity in PV manufacturing and silicon supply, among other factors. (Large Chinese power
groups have continued to invest abroad in solar, however.) Through analyzing China’s top five
cleantech VCs investment trends over time, one can see a clear trend towards diversification and
new sectors.122 In particular, LEDs and new materials are capturing significantly more attention in
recent years.
FIGURE: CLEANTECH VC SEGMENTS BY YEAR FOR TOP FIVE CHINA CLEANTECH VC FIRMS
100%
Others
90%
Wind
80%
Waste/Water Treatment
70%
Sustainable Transportation
Sustainable Agriculture
60%
Solar
50%
Other Generation
40%
New Materials
30%
LED
20%
Grid
Energy Efficiency
10%
Cleaner Coal
0%
2003
2004
2006
2007
2008
2009
2010
2011
2012
Battery/ES
Source: Azure International and company information
In looking at the number of investments by industry segment per year, definite trends emerge.
2008 is by far the most diverse year, mostly reflecting that Tsing Capital was beginning to invest
from its CEF III Fund. From 2008 to 2010, battery and energy storage technology became very
popular but it enthusiasm quickly faded, mirroring the rise and fall of interest in electric vehicles in
the global market—a trend that might now reverse. Finally, the most dominant trend featured in
this figure is the growing optimism in the LED industry from 2010 to 2012. Despite production
overcapacity in 2012, venture capitalists in China are still bullish about the long term prospects of
the LED lighting industry. Innovative LED lighting producers are receiving significant government
support as the nation tries to develop its own core IP.
Chinese venture capital firms typically invest in foreign technologies that have a strong cost
reduction or sales potential in the Chinese market. These investments also reflect deficiencies in
domestic technology: Chinese VC firms invest abroad when domestic technology is limited or
uncompetitive. In recent years, we see increased investment in new material and battery and
energy storage segments. This trend should pick up as slower than expected growth in global
electric vehicle and energy storage markets leaves many early stage companies stranded, allowing
Chinese firms to acquire superior foreign technologies at bargain prices.
9.6
Conclusions on China Outbound Investment Trends
China outbound investment has reached an exciting new phase, as a result of a growing domestic
clean energy industry and a new central government push towards strategic industrial
acquisitions. In several important areas of clean energy, China has already established itself as a
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leader in a field with shrinking margins due to commodity oversupply. As a result, leading clean
energy companies, as well as government agencies, are looking to both consolidate the industry
while expanding into high technology. European countries, with their highly professional research
and development centers and long-standing commitment to sustainable development, continue to
lead in many fields of cleantech where China would like to expand. China-Europe dealflow is still
small, but seems poised to grow, especially as private deals and small deals become more
common.
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10 Guidance on a successful China strategy
Doing business in China has been an attractive proposition for Western companies for many years,
but many companies and organizations have been reluctant to devote significant time to
expanding in China due to the many perceived difficulties and uncertainties. Though many Chinese
speak English, the cultural and language barriers can be quite high. The role of companies and
governments in society is different as well. Added to these issues are concerns about intellectual
property and complying with complex legal and regulatory mandates. Nevertheless, many
Western companies have been successfully doing business in China for years—and not all are giant
multi-national conglomerates. The purpose of this chapter is to both give guidance on China
market entry and briefly debunk some of the myths about doing business there.
10.1 Starting notions on China
China is a big country: It may seem obvious, but one of the first lessons about doing business is
understanding the size and complexity of the China market. First-tier cities like Shanghai and
Beijing bear little resemblance to the small villages of Yunnan or the vast empty wastes of Xinjiang.
In the energy market, policies and market design vary substantially among provinces, as does
openness to international cooperation. National policies and directives may be issued in Beijing
with only broad guidance for local officials on how to meld them with other priorities and
directives, leaving substantial leeway in how and whether to implement them. Demonstration
cities or projects may adopt policies, rules or pricing that enable major leaps in technology
deployment. In other cases, pilot cities or projects may be announced and then not go forward.
These are just a few examples to illustrate how understanding the China market at the ground
level, including in the energy and environment fields, takes time and effort.
Connections matter, but aren’t everything: Tourist guidebooks and business magazines are all
quick to bring up the issue of guanxi, connections, and rightly so. Connections are critical to many
Chinese in getting ahead in a career, doing business deals and overcoming regulatory hurdles. That
said, connections aren’t everything, and many a Western company has been lured by the promise
of high-level connections only to find themselves at a dead-end. In China, as most places, what
matters most is the business case. A technology with higher quality, better performance or lower
cost will find partners and buyers in China, while those without appealing characteristics will not
move forward on connections alone. Technology companies working in China are better off
seeking partners with technical experience, engineering capability, and a real track record of
project success. In the absence of such expertise or subject-area track record, the idea that a
company can pay a single well-connected individual who can influence the right government
agencies and make things happen is usually an expensive illusion.
Cultural differences matter: Though business sense and good technology can go a long way
towards overcoming cultural barriers, the time needed to do so may be longer than anticipated.
Chinese business culture is hierarchical, centralized, and focused on decisions taken by a few key
leaders. The process for reaching decisions may not always be transparent, and in many cases
companies or individuals may repeatedly express a high degree of enthusiasm for undefined
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cooperation, without ever showing interest in moving to next steps. Fancy dinners and expensive
drinks don’t imply a done deal. One of the most complex elements in securing true cooperation is
finding officials at the right level to deal with a topic directly. Even when access to the right level is
open, there may be secrets and hidden motivations that act against progress. Officials may be
embarrassed to openly recognize the reasons for lack of cooperation.
Experience of a Dutch Entrepreneur: “Take time”
We4Ce provides engineering licenses for rotor blade designs for wind turbines in the MW classes
1.5-2.0-2.5-3.0-5.0-6.0. The company was established in 2008 and was almost directly active in
China. Currently China represents 60% of annual turnover of the company and We4Ce is well
established in China with 7 of the top 10 Chinese wind turbine manufacturers as their client.
What sets We4Ce apart is its focus on innovation. This allows the company to stay ahead of its
clients by ensuring ever better performance of the blades against the best cost price, while
making sure that their clients keep coming back to them. “You have to make sure that you have
something they can’t make yet themselves,” says Director Arnold Timmer.
Despite the success of We4Ce Arnold Timmer cautions against high expectations of quick
returns. “Take the time to invest in relationships and getting to know the market,” he says. It
took We4Ce at least 2 years to get started in China and the company had to invest significantly in
marketing and trips. “At first, a lot of doors were closed. But, as our presence in China increased
the doors started to open.’ Arnold Timmer explains that they first started with an agent who
they already knew for a long time and had a strong trust relationship with. To enforce the idea of
being present in China Arnold Timmer or his colleague Hendrik Jan Zwanenburg would often
accompany their agent in meetings and would make a trip to China about every 6 weeks or so.
Since 2010 We4Ce has its own a Representative Office in China.
Behind the successes is also a process of trial-and-error. Timmer emphasizes the importance of
managing relations carefully. “Chinese want to know that they can trust the persons behind the
business. It takes time to build that trust and you should be prepared to invest in this type of
relationship building. It is much less contract based and transactional than in Europe.” “And, you
also have to be flexible,” stresses Timmer as he recounts experiences of protracted negotiations
that forced him to reschedule flights several times and of trip schedules that came together at
the last moment and kept changing. Finally, Timmer argues that maintaining face and showing
respect is critically important to doing business in China. This is often difficult as we cannot
always ‘read’ the situation and the underlying dynamics with our Chinese counterparts. Timmer
has experienced that it can be helpful to have other people help you with this – “you can’t do it
alone.”
Chinese companies often want control: The Chinese market is huge and China has some of the
largest companies in the world—including many industrial behemoths unknown outside the
borders of a single province. Chinese companies are often looking to do deals to acquire
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Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
technologies and know-how. In many cases, deals may be motivated by vertical integration and
the desire to control the supply chain. Simply becoming an intermediary or a distributor may not
hold sufficient attraction. Of course, this depends on the technology and the nature of
cooperation.
Intellectual property can be protected: Given some high profile cases of intellectual property
disputes, many Western companies are rightly concerned about this issue. Even companies
looking to find a partner for a strategic sale of technology would need to be concerned. There are
a number of different tactics companies can use to ensure IP protection. The first and most
important is a good partner screening process. Before beginning detailed partner discussions,
companies should focus on developing a list of high-potential partners and ranking them using
specific criteria. Chinese conglomerates are often much more complex and opaque than Western
equivalents, and understanding areas of overlap and competition can be difficult, especially in
cases of hidden ownership or control structures. The role of local government relationships is also
important: does the local government have a key interest that would be helped or hurt by a
business deal? Doing a distributed solar deal with a property developer might not make sense if it
goes against the interest of the local solar manufacturing firm, even if the two are located in
different cities.
10.2 Towards effective strategies
While it is impossible to define a single success recipe for entering the China market and each
company’s experience is different and unique, there are a number of common steps and processes
that often underlie successes. These processes and steps are based on the above starting notions
for doing business in China. They are designed to focus on the underlying business case for
collaboration and to ensure the best possible strategic alignment between Western and Chinese
business partners.
The initial phase focuses on developing the market entry strategy. This entails learning as much as
possible about the market, policies, the value chain and key players relevant to your business. The
resulting analysis is then used to define the business plan for China. It is important to note that
this China business plan may deviate from the original company business plan in terms of how
products, services and partnerships are defined. Considering the strategic importance of the China
market in cleantech today, it is vitally important for many companies to go through this phase,
whether or not it results in an actual entry into China or not. In today’s cleantech market you need
to know the impact of the China market on your business and you need to have a plan for it.
Investors, clients and partners will be asking for it. And, if you don’t come to China, China may
come to you.
The next phase is to select the right business partners. The right business partners are those that
have the right capabilities and who’s business interests are fully aligned with yours. There are
many different types of partners, many different reasons for partnering and various forms of
structuring a partnership. To ensure good alignment of business interests the market position,
ownership, technological capabilities and strategy of potential partners needs to be carefully
assessed. The market analysis supports this. Often a ranking of potential partners along a set of
44
Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
carefully defined partnership criteria creates clarity as to the relative strengths and weaknesses of
the different potential partners. Initial meetings with potential partners can be useful to assess the
scope for and interest in collaboration and to validate the business strategy. It may answer
questions such as whether your product and strategy is set up to deliver the best results in a
partnership approach in the China market.
FIGURE: PROCESS STEPS FOR DEVELOPING CHINA PARTNERSHIPS
Source: Azure International
Commercial negotiations may be entered into with a number of potential partners. Typically the
process can be structured as working through a series of agreements from the high-level MOU to
term sheet to commercial contracts and the actual structuring of the partnership. In the course of
these negotiations China-based cost modeling of your product or technology may be important to
better understand the business case from your counterpart’s point of view. Furthermore, in order
to protect IP it will be important understand and to manage the value chain. Starting work on
developing sourcing partnerships in parallel or prior to key partnership negotiations can be an
effective way to learn about cost, the market and control the value chain and IP. Process steps for
evaluating supply chain partnerships are outlined in a separate figure below. Furthermore, care
needs to be taken to match progress in commercial negotiations with sharing of IP. Often there
will be significant pressure to reveal key IP early on during commercial negotiations. Professional
Chinese companies that are used to international business dealings, however, will respect the
need to be careful with IP and will allow the process to be structured in a way that IP can be
protected effectively. What should be more important to your counterpart than getting access to
your IP is what your technology can deliver to them and the performance and timing guarantees
you can make.
45
Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
Finally, there is the stage of technology transfer itself. This may require design optimization to
local requirements and integration into your partner’s designs. This stage will require significant
engineering project management and relationship management. The relationship and commercial
agreement or partnership will be tested in practice during this phase and it needs to be managed
on a continuous basis by dedicated staff, almost always from a company base in China.
FIGURE: PROCESS STEPS FOR EVALUATING CHINA SUPPLY CHAIN PARTNERSHIPS
Supplier
Selection
Identification:
Macro level research
Azure supplier
database
Qualification
Costing
Contracting
Management &
Quality
Assurance
Factory Visits:
Cost modeling:
Documentation:
Logistics:
Facility inspection
Qualification Q&A
Drawing walk-through
Estimate the cost of
components, as
preparation for
negotiations
Draft bilingual Specs,
RFQ, PO, Long term
supplier agreement etc.
Management of
shipping and custom
logistics
Negotiation:
Quality Control:
Supplier
Qualification:
Request for Quotes:
Ensure highest
performance and
quality at the lowest
cost
Conduct quality
inspections before
shipping
Write-up analysis
reports
Obtain quotes from
short-listed suppliers;
weigh against model
Prototyping:
Discussions with
suppliers:
Short-listing:
Detailed research
Direct interviews
Screening through a
selection matrix
2-5 suppliers will be
retained for
prototyping
(optional)
Obtain feedback on
design optimization
ID potential cost
reductions
Implementation:
Verify documentation
Execute contract
Supplier
Management:
On-going management
of supplier relationships
Implement cost
reduction measures
Source: Azure International
These are just a few of the guidelines Western firms need to understand to be successful in China.
Although doing business in the country can be daunting and time-consuming, now that China is
the world’s largest energy market and now the biggest funder of renewable energy manufacturing
and installations, few energy companies today wish to ignore the potential of doing business there.
With some careful thought and the right partners, the potential for cooperation is huge.
46
Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
11 Government support for Dutch cleantech companies in China
11.1 Introduction
The Netherlands government facilitates businesses and knowledge institutes from the Netherlands
that want to become active in China. Important government organisations active in this area are
NL Agency (that facilitates export on behalf of the ministry of Foreign Affairs and sustainable
energy innovation on behalf of the ministry of Economic Affairs), and the posts of the diplomatic
network of the Netherlands in China (that are part of the ministry of Foreign Affairs). In this
chapter the main activities and instruments of relevance to clean tech organisations from the
Netherlands are outlined:
11.2 NL Agency
NL Agency is a division of the Dutch Ministry of Economic Affairs that carries out policy and
subsidy programmes focussing on sustainability, innovation, international business and
cooperation. NL Agency is the number one contact point for businesses, knowledge institutions
and government bodies who are seeking information and advice about financing, networking and
regulatory matters. For more information see www.agentschapnl.nl
NL Agency supports various programmes in the field of sustainable economic growth in developing
countries and emerging markets. These programmes focus on innovative pilot projects, jointinvestments and transfer of technology, knowledge and skills in social and economic sectors. This
is achieved through business cooperation and through cooperation between business and
training- and knowledge institutes.
11.3 MoU energy cooperation China – Netherlands
In 2009, China and the Netherlands signed a Memorandum of Understanding (MoU) on energy
cooperation. Signatories are the Chinese National Energy Administration (NEA) and the ministry of
Economic Affairs of the Netherlands. NL Agency is the implementing body of the MoU on the
Dutch side, on behalf of the ministry of Economic Affairs. The representations of the Netherlands
in China, such as the embassy in Beijing, are important partners in the implementation of the
MoU.
The MoU allows for cooperation on a broad range of energy topics. However since 2009 activities
have mostly focussed on renewable energy, i.e. solar PV, (offshore) wind energy, smart grids and
bioenergy. In 2013 also a project on greening the Chinese coal sector has taken place. One of the
aims of the MoU for the Dutch government is to facilitate market entrance in China for Dutch
energy related businesses and knowledge institutes. This is achieved through Sino-Dutch activities
such as study visits, seminars and matchmaking events, joined by government, industry and
institutes from both China and the Netherlands.
47
Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
Examples of recent activities in clean tech cooperation with China are:

(Offshore) wind energy: wind energy is one of the priorities under the MoU. From 2011
onwards, several Sino-Dutch activities have been organised, such as study visits by Chinese
energy officials and industry to the Netherlands and vice versa, seminars and
matchmaking events. Recent events are a seminar prior to the major offshore wind
conference in China (China Offshore wind Conference and Exhibition, June 2013 in
Shanghai) and an event prior to the major wind energy conference in China (China Wind
Power, October 2013 in Beijing). A report of the seminar in Shanghai is published at:
http://www.agentschapnl.nl/actueel/nieuws/seminar-china-wind
For wind energy in China the Netherlands government closely cooperates with Holland
Home of Wind Energy (HHWE), and export association for Dutch wind businesses a.o.
aiming for China (www.hhwe.eu)

Bioenergy: bioenergy is a recent topic under the MoU. A report on opportunities for Dutch
bioenergy in China has been published, followed by a workshop in Beijing in May 2013.
Following these activities, some Dutch bioenergy companies are now exploring the
possibilities for further cooperation and activities towards China. The report, workshop
proceedings and follow-up activities are publised at:
http://www.agentschapnl.nl/actueel/evenementen/kansen-bioenergie-chinabijeenkomst-7-november

A cooperation between China and the Netherlands related to the MoU and of relevance to
clean tech companies from the Netherlands is the Shenzhen low carbon zone project. The
Dutch ministry of Economic Affairs together with the cities of Amsterdam, Eindhoven and
Almere, and a number of Dutch low carbon, clean tech and urban development companies
and institutes cooperate with the Chinese city of Shenzhen on the development of a low
carbon zone in this rapidly developing city.
For more information on the MoU, Ms. Agnes Agterberg ([email protected], NL
Agency) can be contacted.
11.4 Support for doing business in China
NL Agency in general facilitates Dutch businesses in going abroad, including to China. It offers
information, services and government support that may be of interest to clean tech companies as
well. The major forms of support are:

Information and advice: NL Agency answers general and specific questions about doing
business in China, can provide dedicated market information and can perform a business
partner scan (in close cooperation with representations of the Netherlands in China). For
more information see www.agentschapnl.nl.china

Missions: NL Agency together with representations of the Netherlands in China organises
economic missions for Dutch companies to China on several occasions. Clean tech often is
one of the sectors missions are focussing on.
48
Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013

Subsidy for demonstration projects, feasibility studies and knowledge acquisition: these
are subsidies for Dutch companies in several countries, including China. The support aims
at various stages of doing business abroad. For more information see
www.agentschapnl.nl/dhk

Partners for International Business: a programme that enables consortia of Dutch
businesses and institutes to address a foreign market collectively in partnership with the
Dutch government. See www.agentschapnl.nl/pib
11.5 Representation of the Netherlands in China
The Netherlands has an extensive representational network in China. In addition to diplomatic
tasks and consular services, these government posts have economic tasks and actively support
Dutch businesses and other organisations finding their way in China. Furthermore the network of
Innovation Attachés is also represented in China. Clean tech companies from the Netherlands may
well benefit from the support and services the economic departments and Innovation Network
can offer. A useful start to explore the possibilities is the website www.zakendoeninchina.org This
website provides an overview of representational offices and services and several sector reports
for China.
The Netherlands representational network in China includes the embassy in Beijing, four
consulates (in Hong Kong, Guangzhou, Shanghai and Chongqing) and six Netherlands Business
Support Offices, NBSO’s (in Chengdu, Dalian, Jinan, Nanjing, Qingdao, Wuhan). The Innovation
Attaché Network is represented at the embassy in Beijing and at the consulates in Shanghai and
Guangzhou.
49
Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
Cleantech Holland
Cleantech Holland is the Dutch export platform for products, concepts and innovations based on
sustainable technology. It was founded in 2008 by the FME Association (the Netherlands’ largest
federation of companies in the technology sectors), the Ministry of Economic Affairs and the
Ministry of Infrastructure and Environment.
Cleantech Holland addresses the global challenges further to climate change, the growing demand
for energy, and the resulting increase in energy prices by promoting the products and services of
Dutch organizations involved in clean technology (‘cleantech’) on the international markets. Major
opportunities await organizations, whether commercial companies or research institutes, which
specialize in energy efficiency and sustainable energy solutions.
More information at www.cleantechholland.nl
Azure International
Azure International is a leading investment and advisory company focused on China's cleantech
energy sector. Founded in 2003, we have a team of 20+ local and international professionals based
in China with backgrounds in engineering, marketing, manufacturing, consulting, policy,
government relations and finance. In addition to deep advisory capabilities in renewable energy,
energy efficiency, carbon management, and energy finance, we have proven capability to invest in
and accelerate the development of clean energy companies. Our portfolio and partner companies
have achieved both significant commercial success and returns to investors. Azure provides the
necessary expertise and execution capabilities in China to lead relationship development with
government and strategic partners, project execution, sourcing, sales and technology
development – all with deep understanding of Chinese and international requirements. For more
information see www.azure-international.com.
50
Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
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51
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Anders Hove and Sebastian Meyer, “China Wind Market Quarterly, 4Q 2012,” Greentech Media Research
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42
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50
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52
“单位个人自发电可卖给电网 国家电网重举促进分布式电源并网 [Individual units’ own power
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53
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57
Data for this paragraph are from Azure International’s proprietary solar database.
58
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56
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CSG has not revealed its investment allocation plans at the same level of detail as SCGG. While CSG
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development and is more open to foreign suppliers.
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Randy Hancock et al, “China Greentech Report 2011,” China Greentech Initiative,
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Kevin Popper and Anders Hove, “China Grid Scale Energy Storage: 2012-2017,” Azure International and
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63
State Grid’s UHV development plans have been stymied by technology challenges related to its 1000 kV
AC technology and pushback from the central government, which is trying to limit State Grid’s monopoly
and control spending. The central government has only approved four 1000 kV AC line segments since 2008,
forcing State Grid to delay its UHV installation targets. State Grid now plans to complete three horizontal
and three vertical UHV line networks by 2017-two years later than the original goal.
60
64
“社会责任报告 2012,” China State Grid, www.sgcc.com.cn, Feb. 2013.
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67
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68
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65
69
70
Min Li, “Yuanta Greater China Energy Industry Update,” The Yuanta Group, Nov. 2, 2011.
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71
“社会责任报告 2012,” China State Grid, www.sgcc.com.cn, Feb. 2013.
Min Li, “Yuanta Greater China Energy Industry Update,” The Yuanta Group, Nov. 2, 2011.
73
Robert Earley et al., “Electric Vehicles in the Context of Sustainable Development in China,” Innovation
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72
74
“Power Grid Network Solution Overview,” Huawei Technologies, www.huawei.com, 2011.
“State Grid Takes Control of XJ Electric,” Caixin Online, www.english.caixin.com, June 23, 2010.
76
Liu Jie, “Siemens Sets Sights on China’s Rapid City Growth,” China Daily, www.chinadaily.com.cn, Dec. 12,
2012.
77
“GE to Build China Smart Grid Demo Center,” UPI, www.upi.com, Jan. 12, 2010.
78
“CGTI Electric Power Infrastructure Opportunity Assessment: China’s Strong and Smart Grid Investment
Plan Update,” China Greentech Initiative, Dec. 27 2011.
79
Jeff St. John, “Echelon-Holley JV Lands Smart Meter Pilots in China,” Greentech Media,
www.greentechmedia.com, Oct. 8, 2012.
80
Ibid.
81
Azure International interview, Apr. 6, 2012.
82
Wang, Wei, Statistics on China Renewables and Non-fossil Energy Utilization, China National Renewable
Energy Centre, February. 2013
83
Ibid.
84
State Council, "生物产业发展规划," [Bio-Energy Industry Development Plan], December 29, 2012
75
53
Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
85
National Energy Administration, "生物质能发展“十二五”规划," [The 12th Five-Year Plan on Bio-Energy
Development], July 24, 2012.
86
Han Jiangzhou, "完善垃圾发电体系促进生物质能利用," [Improve Waste-to-Energy System and Promote
Utilization of Biomass], The 6th Solid Waste Strategy Forum, January 11, 2013.
87
Ministry of Agriculture, Ministry of Finance, "2011 年农村户用沼气建设项目补助资金通知"[Notice on
subsidies on 2011 rural biogas system construction], 2011.
88
"Biomass gasification technology developments in China," Azure International, February, 2011
89
National Energy Administration, "生物质能发展“十二五”规划," [The 12th Five-Year Plan on Bio-Energy
Development], July 24, 2012.
90
National Energy Administration, "生物质能发展“十二五”规划," [The 12th Five-Year Plan on Bio-Energy
Development], July 24, 2012.
91
Zhang, Caixia, et. al, Spatial suitability and its bio-ethanol potential of sweet sorghum in China, Acta
Ecologica Sinica, 30 (17) 4765-4770, 2010.
92
Administration of Quality Supervision, Inspection and Quarantine, Standardization Administration of
China, "生物柴油调合燃料(B5), GB/T 25199-2010," [Biodiesel fuel blend (B5), GB/T 25199-2010], February
1, 2011; Administration of Quality Supervision, Inspection and Quarantine, Standardization Administration
of China, "车用乙醇汽油（E10）GB 18351-2010," [Ethanol gasoline for motor vehicles, GB 18351-2010],
January 10, 2011
93
Ministry of Finance, State Administration of Taxation,"关于资源综合利用及其他产品增值税政策的通知",
December 9, 2008; Ministry of Finance, State Administration of Taxation, "关于对利用废弃的动植物油生
产纯生物柴油免征消费税的通知" [Notice on VAT redemption of bio-diesel from waste animal and
vegetable oil], December 17, 2010; "关于明确废弃动植物油生产纯生物柴油免征消费税适用范围的通知
" [Notice on clarification of the scope of VAT redemption of bio-diesel from waste animal and vegetable oil],
June 15, 2011.
94
Ministry of Finance, "关于调整生物燃料乙醇财政补助政策" [Adjustment on subsidies of bio-ethanol
production], April 28, 2012; State Administration of Taxation, "关于部分玉米深加工产品增值税税率问题
的公告" [Notice on VAT rates of products from corn processing], March 27, 2012.
95
Ministry of Agriculture, "农业生物质能产业发展规划(2007-2015 年)," [Industry Development Plan on
Agricultural Biomass 2007-2015], July 5, 2007
96
The 863 program or State High-Tech Development Plan is a central government-funded research program
intended to stimulate development of advanced technologies in a wide range of fields. The program was
named after its founding date but continues today.
97
"我省生物柴油年产可达 6 万吨" [Bio-diesel annual production to reach 60,000 tons in Hainan] Dec. 23,
2011, www.ngdsb.hinews.cn; ““川大造”生物柴油明年海南推广,” [Bio-diesel technology from Sichuan
University will be applied in Hainan] Chengdu Evening News, Dec. 11, 2009, www.cdwb.com.cn
98
Ma Longlong, "生物质能产业发展与科技创新调研报告," [Research Report on Bio-Energy Industry
Development and Technology Innovation], Guangzhou Energy Research Institute, China Academy of Science,
March 2012.
98
National Development and Reform Commission, "产业结构调整指导目录(2011 年本)," [The Industry
Restructure Plan, 2011], March 27, 2011.
99
“ 生 物 柴油 生 产 技术 推 陈 出新 ,” [New bio-diesel technologies emerge] ChemNet, Feb. 21, 2010,
www.news.chemnet.com; “清华大学研发实验服务基地——工程微藻异养发酵生产生物柴油技术助力企
业发展,” [Tsinghua R&D center: microalgae to bio-diesel technologies] China Science Resources, June 2,
2010, www.sdtjpt.gov.cn
100
National Development and Reform Commission, "可再生能源中长期发展规划 2007-2020," [Medium and
Long Term Development Plan for Renewable Energy 2007-2020], August 31, 2007.
101
National Energy Administration, "生物质能发展“十二五”规划," [The 12th Five-Year Plan on Bio-Energy
Development], July 24, 2012.
54
Azure International – Opportunities for Dutch Clean Energy Companies in China – 2013
102
National People's Congress, "可再生能源法," [Renewable Energy Law], January 1, 2006; "可再生能源法(
修正案)，" [Renewable Energy Law (Amendment)], April 1, 2010.
103
National Development and Reform Commission, "关于完善农林生物质发电价格政策的通知," [Notice
on Improving Agricultural and Forestry Biomass Power Generation Pricing Policy], July 18, 2010.
104
"世界装机容量最大生物质发电厂在广东运营" [The world's largest biomass power plants starts
operation in Guangdong], Phoenix, www.ifeng.com, Nov. 18, 2011.
105
"凯迪电力生物质发电将成主业" [Biomass Power to become Kaidi's main business], Hexun, September
30, 2011, http://stock.hexun.com; "凯迪电力利润下滑，评级展望被调负面" [Kaidi's profit drops], XNYFD,
January 31, 2013, www.xnyfd.com
106
State Council, "“十二五”全国城镇生活垃圾无害化处理设施建设规划" [Plan on national municipal solid
waste treatment during 2011-2015], April 19, 2012.
107
The 77% figure is from State Council, "“十二五”全国城镇生活垃圾无害化处理设施建设规划" [Plan on
national municipal solid waste treatment during 2011-2015] April 19, 2012; the 85% figure is from the
National Bureau of Statistics, “各地区城市生活垃圾清运和处理情况 (2010 年),” www.stats.gov.cn,
accessed April 16, 2013
108
“中国城市垃圾围城 “分类收集”举步维艰,” [Chinese cities surrounded by waste, difficulties exist in
sorting] China News, Oct. 1, 2012, www.chinanews.com
109
State Council, "“十二五”全国城镇生活垃圾无害化处理设施建设规划" [Plan on national municipal solid
waste treatment during 2011-2015], April 19, 2012.
110
“广州市民集会抗议建垃圾焚烧厂,” [Guangzhou citizens protest against MSW incineration plant] 163,
May 23, 2012, www.money.163.com
111
National Energy Administration, "生物质能发展“十二五”规划," [The 12th Five-Year Plan on Bio-Energy
Development], July 24, 2012.
112
Jingming Li and Mei Xue, “Biological Energy in China: current status and prospect,” 2010.
113
Europe-China Clean Energy Center, "Study of potential and constraints on the biomass sector in China,"
2011.
114
“China’s Strategic Emerging Industries: Policy, Implementation, Challenges, & Recommendations,” U.S.
China Business Council, March 2013.
115
David Brown and Jeremy Ngai, “PwC M&A 2012 Review and 2013 Outlook,” PwC, www.pwc.com, Jan. 1,
2013.
116
Li Zhenyu, “Breaking down China's overseas investment,” china.org, www.china.org.cn, Dec. 11, 2012.
117
Cai Xiao, “China's M&A deals tipped to rebound in 2013,” China Daily, Jan. 31, 2013.
118
David Brown and Jeremy Ngai, “PwC M&A 2012 Review and 2013 Outlook,” PwC, www.pwc.com, Jan. 1,
2013.
119
“China Outbound Investment Will Impact on the Australian Regulatory Landscape,” King, Wood &
Mallesons, www.mallesons.com, April 2010.
120
Yue Chen et al., “China Going Global – A Boomerang Strategy,” PowerPoint presentation, Columbia
University, May 8, 2012.
121
Du Juan, “Outbound M&A activity on the rise, survey says,” China Daily, Jan. 18, 2013.
122
The five cleantech VCs surveyed here are Tsing Capital, Qiming Venture Partners, GSR Ventures, IDG
Capital Partners Northern Light Venture Capital.
55