When China announces a national target, it generally has the ability and capacity to ensure that goal is met. But in the case of offshore wind, it has not even come close.
The National Energy Administration (NEA) set cumulative targets in 2011 for 5GW of installed offshore wind by 2015 and 30GW by 2020. Yet forecasts suggest that only 1.2GW will have been installed by the end of this year, with China lucky to get a third of the way to its 30GW goal by 2020.
Nevertheless, the tide seems to be turning for the sector. The rate of installation has been picking up this year, with analysts expecting it to accelerate in the years to come.
To explain why this is happening, it is first necessary to understand the reasons why the sector is so far behind schedule.
Offshore wind is an expensive business at the best of times. To start the industry from scratch in a new territory — where there is no local supply chain, no installation vessels and no local experience — is even more expensive. So to kick-start a local offshore wind industry, provincial governments have to offer generous incentives to make it worthwhile for commercial developers to invest.
However, the subsidies set by the Chinese government have never been high enough to attract the level of development Beijing required. In an apparent attempt to remedy the situation, a new feed-in tariff (FIT) was introduced last year, but at 0.85 yuan ($0.13) per kWh for near-shore installations and 0.75 yuan for intertidal projects, it still wasn’t enough.