China launches first price competition for offshore wind

  • Jul 09, 2019
  • Recharge News

China has launched its first offshore wind tender to include a price competition element, with a 200MW project off the coast of Shanghai up for grabs, said a local government statement.

The Shanghai government’ s June release of its 2019 municipal offshore wind development plan includes putting part of the Fengxian Offshore Wind Project out to tender.

Poised to be the third offshore wind farm off Shanghai city, the project in Hangzhou Bay plans to eventually install 400MW turbines in four blocks, two of which totaling 200MW are included in the first tender.

The project will be the country’s first to be at least partly determined by price competition, after Beijing’s policy shift last year requiring new wind allocations to be determined by tenders with power cost as a key element, scrapping the former fixed offshore wind feed-in tariff of 0.85 yuan/KWh ($0.123/kWh).

This year the Chinese National Development and Reform Commission (NDRC) doubled down on the decision and introduced price caps for wind and solar tenders. New offshore wind projects face price ceilings of 0.8 yuan/kWh and 0.75 yuan/kWh this year and next respectively, as Recharge has previously reported.

Shanghai’s tender rules place a stronger emphasis on price competition than policies announced by other provinces earlier this year. The bidders will compete for a maximum of 100 points, where their bidding prices, financial capability and technical plans are all taken into consideration.

Bidding prices account for 40% of the total score in the Shanghai contest. The lowest bidder will take all 40 points, while the others face reductions to their own scores determined by their divergence from the lowest bid.

Shanghai’s tender also marks a slight loosening of eligibility criteria that could ease the way for foreign developers to participate, with no requirement relating to a bidder’s track record in China. All other provincial offshore wind tender rules award higher points to companies with domestic portfolios. However, bidders with experience building offshore wind projects in Shanghai will receive up to four extra points.

The city so far has only two offshore wind projects built. The 204MW Donghai Bridge project is owned by a six-party consortium led by China Datang and State Power Investment Corp (SPIC). A joint venture between local government-owned Shenergy and China Huaneng earlier this year completed the construction of the two-phase Lingang project totaling 200MW.

The Shanghai process is likely to be among a handful of offshore tenders to take place in the coming two years, as Beijing prohibits new projects in provinces whose installed and approved capacities already exceed a 2020 target previously set by the government.

That rule has led major offshore wind provinces Guangdong, Jiangsu, and Shandong to suspend proposed offshore wind tenders this year while the sector works to advance massive backlogs of already-approved projects off their shores.

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