NPC member Zhang Chuanwei: Supply-side reform boosts China to become a new energy power

Published Date:2016-12-20

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“With renewable energy in global total installed capacity exceeding coal and natural gas for the first time, and fossil energy prices represented by oil falling to historic lows, the “inflection point” of the alternation of new and old energies is officially coming. In this trend, China need to boosts green development with new energy through supply-side reform to realize the transformation from a new energy country to a new energy power”. Zhang Chuanwei, NPC member, chairman of the board of directors and CEO of Ming Yang New Energy Investment Holding Group, said when accepting a press interview the other day. 

“The core of energy supply-side reform is to realize the optimization of energy structure and the reconfiguration of resources. As the most important resource element, energy resources reform is unable to exceed. While, policies and red tapes can only play a short-term effect”, Zhang Chuanwei said. 

 

To this end, he proposes to develop a “Clean Electric Power Law” with Chinese characteristics, and define the new energy related issues in legal form, such as “Green Card” system, consumptive scheduling, subsidies, quotas, social capital participation, multiple power operations, and the issues related to new distributed energy resources in  Several Opinions of the CPC Central Committee and the State Council on Further Deepening the Reform of the Electric Power System (No. 9 document), regulate the behavior habits in energy production, supply and consumption, promote low-carbon economic transformation according to law, and facilitate the development of green economy. 

 

Statistics show that the abandoned wind power and abandoned photovoltaic power amounted close to 50 billion kilowatt-hours last year, equivalent to the total installed capacity of wind power generated last year. Zhang Chuanwei believes that in this situation, it is necessary to establish green card system, using market-oriented mechanisms to promote new energy electricity consumption, and strengthen the supply priority of new energy market. As for clean energy electric power, priority is give to those who hold “Green Card” to access of Internet and sales of clean energy electric power. Force the places not reaching the construction indicators to buy “Green Card” from other places and exchange for the new energies. Energy consumption enterprises must hold “Green Card” quota to select new energy and get national policy preferences.

 

At present, China has carried out carbon-trading pilot in seven places. Zhang Chuanwei said that both carbon transaction and green card transaction are of green attributes. One is to ensure clean electric power production at the front end, and the other is to ensure clean electric power consumption at the end to achieve energy-saving and emission-reduction. 

As for the Guiding Opinions on Establishing a Guiding System for Renewable Energy Development and Utilization Targets issued recently, many people think it as a weakened version of renewable energy quota system, just because of a large distance with industrial expectations. Zhang Chuanwei believes that it is not important whether the renewable energy generating capacity specified in the file reaches the specific figure of total generating capacity. The most important is to further secure the status of new energy in the entire energy structure. Next, a legally binding punishment mechanism must be established to effectively promote the renewable energy quota system. 

 

“No matter quota system and green card system, or subsidy system and consumptive scheduling system, a integrated system must be formed, including complete policy system and laws and regulations regarding clean energy from development to operation”, Zhang Chuanwei said. 

 

The key to solve abandoned wind power and photovoltaic power is mechanism 

In the opinion of Zhang Chuanwei that the key to solve the problem of abandoned wind power and photovoltaic power is mechanism. Fundamentally, it is the issue related to supply-side structural reform, scheduling, and priority of allocation. 

 

“We must clarify who regulates the peak for whom. In the new trend of transformation from complementary energy to substitute energy, it should not be the wind power and solar energy to regulate the peak for coal power, but coal power regulates for wind power and solar energy. Give priority to clean energy first in the guaranteed power supply, scheduling mechanism, distribution and supply mechanism, and then fossil energy. Certainly, we need macro-control of government departments in promotion process”, Zhang Chuanwei said.

 

Last year, China’s new wind power installed capacity exceeded 30 million kilowatts, refreshing historical records. However, a consensus forecast by the industry is that new installed capacity of wind power will be significantly lowered in the next few years.

 

Zhang Chuanwei predicted that the new wind power installed capacity in 2016 will be 20 -25 million kilowatts. He believes that large-scale wind farm development tends to reduce in the next step. Distributed off-grid wind-solar photovoltaic hybrid energy power system, even the solution for generation, distribution and sales will become the new trend of the development of wind power and clean energy during the period of the “13th Five-Year” Plan. 

 

“Under this background, wind power manufacturers need to transform from single fan suppliers to system integrators and clean energy overall solution providers change, and transform from selling electricity and equipment to asset management”, Zhang Chuanwei said, “Currently, the business model innovation of wind power manufacturing industry in China is seriously insufficient, unable to support the transition from production-oriented manufacturing to service-oriented manufacturing. According to international experience, manufacturing is the core of GE, SIEMENS and other multinational companies, but it is leasing and financial sectors that make them profitable. Therefore, we must also carry out business model innovation, support new energy equipment companies to establish finance and financial leasing companies, and support wind power industry to establish life-cycle asset management companies.”

“Three Centers” support a new energy power 

Recalling the history of China’s wind power development, Zhang Chuanwei said with all sorts of feelings that when China started wind power development, even a MW wind turbine was a miracle. Now the world’s largest stand-alone and offshore wind turbine are made in China. And China’s wind power technology, standards and construction have begun to move many foreign countries and regions.

 

However, Zhang Chuanwei also admitted that, China's new energy development is still faced with the problem of core technology being controlled by other countries, and similar difficulties are also seen in power storage, solar energy and wind energy. Therefore, he suggested taking the research and development of new energy core technology innovation as a major national strategic project, integrating resources, innovating models, improving the probability of success, and speeding up the transformation of achievements. Specifically, we may consider the establishment of new energy innovation national fund, participate in and support the research and development of new energy major technologies at home and abroad, create the conditions to enable global high-end talents, technology and capital to gather and flow to China, support the innovation and creation of new energy in China, and forge China into a world’s new energy technology research and development center.

 

In addition, with the coming of “inflection point” of the alternation of new and old energies, the world's demand for new energy high-end equipment is huge, which brings a rare opportunity for China to adjust industrial structure and export high-end equipment manufacturing. We should give new energy equipment manufacturing and export an important position equal to high-speed rail and aerospace, make it as the main industry of Made in China 2025, and take the opportunity to build China as the world’s new energy high-end equipment manufacturing center.

 

For example, to drive industrial innovation with projects, and to drive the research and development of offshore wind power system technology and system equipment through large-scale development, including offshore wind turbines, marine equipment, transportation and maintenance equipment. At upstream, it can be extended to raw materials, including the research and development of composite materials and polymer materials for large blades. At downstream, it can promote overall solutions, not only providing complete machine, but also service-oriented manufacturing, including downstream overall design, marine design and construction technology to form all-round solutions. 

 

In addition to the above-mentioned research center and manufacturing center, Zhang Chuanwei also mentioned that in the conventional fossil energy era, the rules of games and the right to speak are in the hands of Western countries. In current renewable energy era, China basically synchronizes with the world and even in a leading position. China can seize the opportunity to dominate the rulemaking of new energy standards, provide China-mode clean energy services, become a world's clean energy trading center, and facilitate China’s transformation from a new energy country to a new energy power through the dynamic interaction of the “three centers” of research and development center, manufacturing center and trading center.