April 13, 2023

Daisy ZhangChina Utility & Renewable EnergyBNP Paribas Equities (Asia) LtdShanghai Representative Office+8621 6096 9025daisy.zhang@asia.bnpparibas.com

China Renewable Energy – Growth for the Next Decade

April 13, 2023 2

Agenda

Actions to stimulate renewable energy development

Current energy structure in china

Current development of renewable energy in china

Concerns over the development and their solution

April 13, 2023 3

Currently, China is relying too much on coal

Over 70% of China primary energy consumption are supported by coal

74% of installed power generation capacity are thermal power

81% of electricity is generated from coal

Downside: Environmental impact, GHG emission, Sustainability, etc …

Sources: China Electricity Council, BP Energy Review 2011, National Bureau of Statistics

Installed capacity breakdown (end - 2010)

Power generation breakdown (2010)

Primary energy structure (2010)

April 13, 2023 4

… but appetite for energy will not stop

The high reliance on coal power is NOT sustainable

China must find new way to support the future growth

Power demand growth remain high, 12% y-y growth in 7M11

The continued growth of the energy intensive industry such as chemical, construction material, ferrous and non-ferrous metal processing is driving the total demand

Total power consumption for 7M11 has grew 12% y-y

China is experiencing a sever power shortage partially due to the high demand growth

On the other hand, the government has start to put stringent control over future coal consumption for environment protection

e.g., Beijing government has planned to REDUCE the coal consumption of city by 26% in the next five years

the Yangtze River Delta, Pearl River Delta, and other seven regions are likely to adopt similar environment protection plan

On the other hand, China has enormous potential for renewables

April 13, 2023 5

Fuel typeDeveloped (end-2010)

Economical Resources

Developed %

Hydro 213 GW 402 GW 53%

Wind (onshore)

44 GW 297 GW 15%

Wind (offshore)

0.1 GW 180 GW 0.06%

Solar 0.24 GW

1-7 trillion ton standard coal

equiv. sunlight

Minimal

Biomass 5.5 GW1.17 bn ton

standard coal equiv.

Minimal

Sources: Chinese Academy of Engineering , Energy Bureau, China Electricity Council

Renewable resources and development Wind power resources

Solar power resources Solar power resources

April 13, 2023 6

The nation is determined to promote renewable energy

In September 2007, the NDRC first released its Medium- and Long-Term Development Plan for Renewable Energy. This sets out targets for renewable energy up to 2020, with a 10% contribution to total energy consumption by 2010 and 15% by 2020.

To meet its targets, the PRC government has announced its intention to invest about RMB 2 trillion in the development of renewable energy.

In addition, this plan also includes a “Mandated Market Share” policy, It sets targets that the market share of power generated from non-hydro renewable sources shall reach 1% by 2010 and 3% by 2020.

In August 2009, the NDRC announced that the “New Energy Industry Promotion Plan” would be issued.

According to a draft of the plan, China plans to invest RMB 5 trillion in new energy infrastructure development (including nuclear, wind, solar, and biomass power generation) by 2020, upgrading traditional energy, and industrializing the clean coal, smart grid and electric car industries.

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A bundle of policies to benefit the renewable players are issued

Favourable policy to cultivate the renewable energy sector

Differentiated on-grid tariff – to benefit the renewable energy operators

Priority to sell on grid – energy from the renewable sources has been granted the priority to be sold on grid among all categories

Tax cut – 50% VAT tax rebate to wind power operators

Favourable policies towards lending and R&D investments

On grid tariff by power category

Sources: NDRC, BNP Paribas

April 13, 2023 8

Renewable share will be increased significantly in next decade

Fuel type2010(MW)

2015E(MW)

2020E(MW)

2010-2020CAGR (%)

Thermal 706,634 917,000 1,150,000 5.0

Hydro 213,397 284,000 330,000 4.5

Nuclear 10,824 43,000 80,000 22.1

Wind (on grid)

31,070 90,000 150,000 17.1

Solar 240 10,000 40,000 66.8

Biomass 5,500 13,000

Total 962,190 1,437,000 1,885,000 7.0

Power Installed Capacity Breakdown

Source: China Electricity Council, NDRC; BNP Paribas

Global wind power capacity ranking

By 2010, wind and solar only account for only 3.3% in total installed capacity

By 2015 and 2020, the share of renewables is estimated to reach 7.0% and 10.1%.

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Energy structure will be much improved

China Primary Energy Structure

By 2010, share of wind and other renewable is insignificant

By 2015 wind, solar and other renewable energy is expect to take 2.6% share

By 2050, China aims to lower the dependency on coal and oil to 50% and increase share of hydro, wind, solar and other renewables to 25%

Sources: NDRC, National Bureau of Statistics

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Wind power has been growing robustly in the past years

Wind power installed capacity almost double each year in the past 5 years, thanks to the favourable policies and declining wind farm construction costs

By end 2010, China has become the largest country in the world in terms of both cumulative wind power installed capacity and annual installed capacity

Wind power installed capacity growth Global wind power capacity ranking

Sources: CEC, GWEC

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2,010 2015E

Biomass(MW)

April 13, 2023 11

PV and Bio-mass will also experience phenomenal growth

Source: BP Energy Review 2011, NDRC, China Securities Journal

PV installed capacity growth 2000-2010-2020E

Bio-mass capacity growth 2010-2015E

~20% grow p.a.

500 to 700 new plants to be built before 2015

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However, there are some concerns

Concerns Solution

Fluctuation of renewable power generation

The output of wind farms and PV cells does not match the power consumption across time

Distribution of renewable resources:

Wind resources and sunlight resource are concentrated in Northwest, Inner Mongolia, and Northeast China

However, the main power load of China are located along the coast line and in central China

Thus grid connection becomes a major bottle neck for renewables

Ultra High Voltage Power Grid

3 horizontal, 3 vertical, 1 loop of UHVAC grid to integrate China’s renewable plant and power users in one inter-connected grid

Over 10 UHVDC line to deliver electricity over thousands of kilometres

Over RMB 500 bn will be invested

Construction of Pump Storage Stations

To store the energy from the renewable sources and release when needed

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National Power Grid Upgrade Plan - UHVAC

Chongqing

Urumqi

Yongdeng

Completed

Planned/In construction

Northwest China Grid(State Grid)

Central China Grid(State Grid)

East China Grid (State Grid)

North China Grid(State Grid)

Northeast China Grid (State Grid)

South China Grid(South Grid)

Shanghai

Ximeng

Beijing

North ZhejiangHefei

Xuzhou

Jinan

Weifang

Zhangbei

Jingbian Central Shanxi

North Hebei

Zhumadian

Nanyang

Jingmeng Wuhan

ChangshaNanchang

Leshan

Ya’an

Nanjing

West Inner Mongolia

West Inner Mongolia Grid

UHVAC

Will help connect the wind power from Inner Mongolia, Xinjiang and Gansu to the Central China and North China power Grid

Sources: State Grid, BNP Paribas

April 13, 2023 14

National Power Grid Upgrade Plan - UHVDC

UHVDC

Connect the wind power and PV plant from Inner Mongolia, Xinjiang, and north east to central and east China

Connect the hydro power from Southwest China to south and east China

Completed

Planned/In construction

Zhengzhou

Chongqing

Hami

Zhundong

Xiluodu

ZhejiangXiangjiaba

Shanghai

Nuozhadu

Guangdong

Jiuquani

Zhuzhou

Longdong

Xinyu

Xichang

South Jiangsu

NingdongQingdaoNorthwest China Grid

(State Grid)

Central China Grid(State Grid)

East China Grid (State Grid)

North China Grid(State Grid)

Northeast China Grid (State Grid)

South China Grid(South Grid)

West Inner Mongolia Grid

Hulunbeier

Chifeng

±1100kV

±660kV

±1100kV Voltage, all non labeled lines are ±800kV

Sources: State Grid, South Grid, BNP Paribas

April 13, 2023 15

Development of pump storage station

Pump storage stations offers the possibility to store the excessive power generated from wind power/solar power, and output the energy to the power grid when required

China plans to quadruple the capacity of pump storage stations from 15GW in 2010, to 60GW by 2020

Forecast of pump storage station capacity Configuration of a pump storage station

Sources: NDRC

Illustration from internet

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Conclusion

China has been relying on coal too much in the past. This has to be changed, in a green way

Favorable policy and investment are poured into the sector stimulating the growth

The share of renewable energy in China will be significantly increased in the next decade, benefiting China and the green energy players

There are headwinds, but we are confident that these issues can be solved with combined effort from government and market participants

April 13, 2023

Daisy ZhangChina Utility & Renewable EnergyBNP Paribas Equities (Asia) LtdShanghai Representative Office+8621 6096 9025daisy.zhang@asia.bnpparibas.com

The end

Thank you!