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When Butterfly Meets Wind
Strategy Proposal for SK’s Entrance into China’s Wind Market
By LI Guang, ZHAO Tian, ZHU Sheng
School of Management,
Fudan University
Rubicon Team
Outline
Background
Profitability
Market Size
Industry Analysis
Strategy Goal, Goal Decomposition and
Strategy Directions
External
Environment1 Market Analysis
&SWOT2 Proposed Strategies3
Policy Overview
SWOT Analysis
Roles Sites & Modes
Manufacturer Investor
S1: Positioning in
Value Chain
Case Study 1:
AES’s success
in CDM Projects
Case Study2:
How SK entered
Petro Industry
In China
2nd Tier Region Off-grid Power
S2: Combination of
Carbon-free Industry
and Off-grid Power
SK Vision:
Sharing Happiness When
Butterfly Meets Wind
Conclusion: Wind
energy industry is very
promising in China.
Conclusion: SK Energy
could join hands with
players in value chain to
seize great opportunities in
the vast and growing
market.
Outline
Profitability
Market Size
Industry Analysis
Strategy Goal, Goal Decomposition and
Strategy Directions
External
Environment1 Market Analysis
&SWOT2 Proposed Strategies3
SWOT Analysis
Roles Sites & Modes
Manufacturer Investor
S1: Positioning in
Value Chain
Case Study 1:
AES’s success
in CDM Projects
Case Study2:
How SK enter
Petro Industry
In China
2nd Tier Region Off-grid Power
S2: Combination of
Carbon-free Industry
and Off-grid Power
SK Vision:
Sharing Happiness When
Butterfly Meets Wind
Conclusion: SK Energy
could join hands with
players in value chain to
seize great opportunities in
the vast and growing
market.
Background
China is in need of
renewable energies in future.
Wind energy development
is booming around the world.
Wind energy is a promising
industry in China.
Policy Overview
Political will fuels wind
energy industry in China
With modern industrialization
around the world energy crisis is
becoming more and more manifest.
The scarcity of traditional energies
and negative impacts on the
environment is becoming a global
concern.
Proposed StrategyMarket Analysis and SWOTExternal Environment
Traditional Energy
Increasing Demand for Energy in China
Electricity’s Demand Growth, Supply Growth (Net Capacity
Increase) and Generation Hours under Optimistic Expectation
4860
5250
5460
5411
5221
5015
5069
5194
5359
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
2002 2003 2004 2005 2006 2007 2008 2009E 2010E
4400
4600
4800
5000
5200
5400
5600
5800
Demand Grow th Supply Grow th Pow er Generation Hours
Source: China Galaxy Securities, 2008 Energy Insight
Background
Negative impacts of traditional energy
CO2
Emission leads to global greenhouse effects.
CO
Incomplete burning of oil and coal,
resulting in toxic gases emission.
SO2
Resulting in acid rain, causing damage to
the eco-system.
Dust Increasing risk of Respiratory Disease.
NOX
Severely poisonous, giving rise to risks of
lung cancer and other diseases
Growing industries along with
economic development in China
strongly carrying the electricity market
forward.
With improved life qualities in China,
living electricity driving the demand
going up.
Economic reconstructions push the
application of renewable energies in
China.
Key Factors Affecting Demand
China is in need of
renewable energies!
Country Share of New Installed Capacity 2008
All Source: World Wind Energy Report 2008, Global Wind Energy Council
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
200000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E2010E
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
Total Installed Capacity MW Incremental Capacity MW Increment Growth MW
World Total Installed Capacity and Incremental Capacity MW
Wind energy development
is booming around the
world.
Trend of Wind Energy Exploitation around the World
0 5 10 15 20 25 30
USA
Germany
Spain
China
India
Italy
France
UK
Denmark
Portugal
2007 2008
Installed Capacity: Top 10 Countries MW
Background
Worldwide capacity reaches
121,188 MW, out of which 27,261
MW were added in 2008.
Wind energy continued its growth
in 2008 at an increased rate of 29 %.
China continues its role as the
most dynamic wind market in the
year 2008.
Summary
Proposed StrategyMarket Analysis and SWOTExternal Environment
Energies Overview
2000
2010E
2020E
0
20
40
60
80
100
120
140
2005 2006 2007 1H 2008
Wind Others Small Hydro Large Hydro Nuclear Coal
1.18%
1.80%
2.08%
0.74%
China Annual Capacity Add Additions
and Wind Energy Growth GW,%
Source: China Galaxy Securities:
Growing Wind Energy
Source: China Galaxy Securities, 2008 Energy Insight
Energy Structure in China
Wind energy is a
promising industry in
China!
Advantages of Wind Energy
Background
China’s electricity demand
growth (9% to 10% annually)
has created a capacity gap.
Wind is evolving as one of
China’s top four technology
options for new capacity.
With coal-fired electricity
prices rising, wind is becoming
more cost-competitive.
Reliable, affordable and clean.
Immense storage, easy access,
and low marginal cost. .
Wind projects under stable
policy frameworks are less
affected by the credit crunch than
higher-risk investments.
Wind energy is the answer to
both the environmental and
financial crisis!
2010E
Proposed StrategyMarket Analysis and SWOTExternal Environment
2006.1
Renewable Energy Law
Established the framework of the
national exploitation of clean energies. 3
principles on wind were proposed:
Implement fixed pricing to wind electricity
power.
State Grid unconditionally purchases the
wind electricity. Price gap would be shared
among the grid.
The state establishes fund to support wind
power development financially.
2006.10
NDRC Move
(National Development and
Reform Committee) improve the
standard of subsidies and lower
the qualifications of the
companies to acquire loans from
the bank and funds.
2007.8
Market Open Policy
Long-term planning for the
development of renewable energy
Make the wind power market more
competitive and open.
Take advantage of coastal areas and
inland wind resource.
Targeting at a capacity of 5 MkW and 30
MkW in the year 2010 and 2020
respectively.
To form the wind-power center in several
provinces such as Inner Mongolia, Jiangsu,
Shandong and Liaoning.
2008.1
Price Reform
NDRC set the bottom line for the
auction price of biding for the
permission to exploit wind energy
to avoid malign competition and
attract more foreign investments.
2008.4
Financial Support
The Ministry of Finance further
reduce the tax imposed on the
wind-energy companies.
National Customs cut down
tariff on importing advanced
wind power technologies and
equipments.
Political will in
China is striving
for propelling
wind-power market
Policy
Political Will Fuels Wind Energy Industry in China
Proposed StrategyMarket Analysis and SWOTExternal Environment
Outline
Background Strategy Goal, Goal Decomposition and
Strategy Directions
External
Environment1 Market Analysis
&SWOT2 Proposed Strategies3
Policy Overview
Roles Sites & Modes
Manufacturer Investor
S1: Positioning in
Value Chain
Case Study 1:
AES’s success
in CDM Projects
Case Study2:
How SK enter
Petro Industry
In China
2nd Tier Region Off-grid Power
S2: Combination of
Carbon-free Industry
and Off-grid Power
SK Vision:
Sharing Happiness When
Butterfly Meets Wind
Conclusion: Wind
energy industry is very
promising in China in
future.
The wind energy market in
China is vast, exploitation
remains unbalanced
Price of wind energy will
become more competitive in
near future.
Overview of different
players in the value chain.
Profitability
Market Size
Industry Analysis
SWOT Analysis
Market Size
Chief Distributions of Wind Energy in China 107W
Year 2007-08 Installed Capacity Increments 106W
Source: China Investment Annual 2005
Inner Mongolia
Xinjiang
Heilongjiang
Gansu
Jilin
Hebei
Shandong
Jiangxi
Jiangsu
Guangdong
Zhejiang
Fujian
Hainan
0 2 4 6
Inner Mongolia
Liaoning
Hebei
Jilin
Heilongjiang
Jiangsu
Gansu
Xinjiang
Shandong
Guangdong
Fujian
Zhejiang
Hainan
3.9
2007
2008 Increments
Source: China Wind Energy Association 2009
2.61.30
Chief Distribution and Exploitation of Wind Energy in China
0
5000000
10000000
15000000
2000 2001 2002 2003 2004 2005 2006 2007 2008
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
Total Capacity MW Total Grow th
Source: China Wind Energy Association, Century Securities
Fastest Growing %
Hainan 568.97
Zhejiang 311.04
Liaoning 142.52
Inner Mongolia 138.93
Hebei 126.00
Tier 1
Tier 2
Current Exploitation
Energy Distribution
China’s wind power resources mainly
distribute in the eastern coastal areas
and “Three-North Region”-- Northeast,
North China and Northwest.
Inland wind resource is larger than
that of coastal areas. The risk of
onshore investments are lower than
those of offshore projects
China’s Total Installed Capacity and Total Growth
The wind energy
market in China is
vast, exploitation
remains unbalanced.
Investment on Wind Energy has been
increasing exponentially in China at
nationwide scale.
The wind resources of eastern coastal areas
remain unexploited compared to the “Three-
North Region”.
The markets of Tier-2 districts, with more
potential to develop, grow much faster than
that of Tier-1 districts.
Proposed StrategyMarket Analysis and SWOTExternal Environment
Profitability
Estimated costs of Wind and Coal Energy
0.5
0.4
0.7
0.6
0.3
0.2
0.1
0
2000 2005 2010E 2015E 2020E
Wind Energy Coal
Source: Wind Energy 12 in China, China Galaxy Securities
No. Name of wind plants
Highest
Price
Yuan
1 Inner Mongolia ZhuRihe Wind Farm 0.609
2 Inner Mongolia Shangdu Wind Farm 0.609
3 Hebei Zhangbei Wind Farm 0.984
4 Xinjiang Danban City No.1 Wind Farm 0.533
5 Liaoning Donggang Wind Farm 0.915
6 Zhejiang Cangnan Wind Farm 1.200
7 Hainan Dongfang Wind Farm 0.560
8 Guangdong Nanao Wind Farm 0.740
9 Shanghai Chongming Nanhui Wind Farm 0.773
Average Price 0.769
2nd
Tier
1st
Tier
The price of grid-connected wind electricity is
greatly affected by the government’s policies.
Price Differentiation and Cost Trends
The price of grid-connected wind
electricity by province (Highest)
Current Pricing and Cost
 In the current market the average price of
electricity generated by wind farm is still higher
than that of coal. The price disadvantage is the
main barrier constraining further development of
wind energy market.
Future Prospect
 In 2020, the estimated cost of
wind electricity the cost of coal
electricity, which will stimulate the
widespread application of wind
power.
The application of CDM in joint
venture projects could make wind
electricity more competitive by
generating extra revenue from
CERs. Price of wind energy
will become more
competitive in near
future.
Proposed StrategyMarket Analysis and SWOTExternal Environment
Industry Analysis
Turbine Manufacturers
Brand
Manufacturer
Capacity
(kW)
% of
domestic and
joint venture
capacity
% of
increased
total
capacity
Sinovel
华锐
1402500 29.71% 22.45%
Goldwind
金风
1131750 23.98% 18.12%
DEC
东汽
1053000 22.31% 16.86%
Increased market share of Domestic and Chinese-
foreign joint venture turbine manufacturers in 2008
Brand
Manufacturer
Capacity
(kW)
% of foreign
owned
capacity
% of
increased
total
capacity
Vestas 599700 39.30% 9.60%
Gamesa 508300 33.31% 8.14%
GE 145500 9.53% 2.33%
Increased market share of foreign owned turbine
manufacturers in 2008
Brand Market status Main focus
Guodian
(Longyuan)
A specialized wind power
development company
owning the largest shares
of installed wind power
capacity in China.
Three North Region, Southeastern
China. Case study: Jiangsu
Rudong Wind Power Concession
Project
Datang
Rank No.2 in China wind
market ownership. With
great impact in the
Northern China electricity
market.
Northern China. Shanghai. Case
Study: Shanghai Donghai Bridge
Offshore wind farm.
Huaneng
The largest independent
electricity generator in
Asia. With solid
government background.
Inner Mongolia, Shandong,
Sichuan, Guangdong, Case Study:
Huaneng Zhaobei Wind Farm
State Generators
Top 3 State generators in wind market
Summary of turbine manufacturers in China
Sinovel, Goldwind and DEC
capturing more than 57% of the
market. Vestas, Gamesa and GE
dominating among foreign
manufacturers.
With ambitious wind targets,
state generators are
harnessing strong capacity
and political will to carry the
market forward.
All Source: China Wind Energy Association
While turbine assembly
manufacturing booming, key
components witnessing shortage.
Chinese OEMs to dominate
supply market in the long term.
Foreign entrants are
seeking a foothold through
near-term partnerships, with
exploration targeting long-
term pipeline activations.
Proposed StrategyMarket Analysis and SWOTExternal Environment
•Success in Korea
Bellwether in the industry of Jeju Island, South Korea.
Achievement in various energy fields around the world.
•Green Ocean Strategy.
Bring happiness to people by implementing SRI in green
energy field.
•Robust Financial Ability
Fortune 500 Company and high reputation in China.
•Expertise
Several wind blade patents, goals to become one of the
largest wind machine manufactures in the world.
•Localization
Localization of the business in China to be improved,
developing coordination with the domestic companies and
local government.
•Policy
The regulation of foreign capital to enter the energy industry
•Market Share
Insufficient infrastructure and facilities in China compared
with the professional wind power companies, such as GE,
Vestas, etc..
Strength Weakness
Opportunity
•Demand
An answer to the world energy crisis and China’s rapid
development
•Competitor
The low quality of domestic wind-energy investment
companies.
•Nationwide Support
Attention of government on the clear energy and favorable
policies towards .
Threat
•Financial Crisis
Financial Crisis world widely impairs the process of huge
investment for lack of the liquidity.
•Entrance Cost
High cost of the wind power and subordinated negotiation
power when coordinated with State Grid.
•Technological Uncertainties
Some pending technological problems such stabilization of
the grid due to the high levity of wind power.
SWOT Table
Proposed StrategyMarket Analysis and SWOTExternal Environment
Outline
Background
Profitability
Market Size
Industry Analysis
Strategy Goal, Goal Decomposition
and Strategy Directions
External
Environment1 Market Analysis
&SWOT2 Proposed Strategies3
Policy Overview
SWOT Analysis
Roles
Manufacturer? Investor?
S1: Positioning in
Value Chain
Case Study 1:
AES’s success
in CDM Projects
Case Study2:
How SK enter
Petro Industry
In China
SK Energy could expand
his roles in the value chain
and create additional value.
Conclusion: Wind
energy industry is very
promising in China in
future.
Conclusion: SK Energy
could join hands with
players in value chain to
seize great opportunities in
the vast and growing
market.
Strategy goal, goal decomposition and strategy directions
Goal
To enter China’s wind
power market and explore
“Green Ocean” strategy by
investing in wind energy
market of China.
To cut down the cost
and gain a higher profit
To choose a niche market
to enter and boost its share
(Social Responsibility
Investment) To secure its
position as a top global “Low
Carbon, Green Growth”
company, to create and share
happiness with Chinese people.
Market
Profitability
SRI
To Be a Pure Turbine Manufacturer or a
Wind Farm Investor?
To find a new wind-farm new potential
areas and model
Criteria Evaluation
The difficulty to
enter the market
The Current Market Share
The technology
advantage
The number of core technology
patent main turbine manufactures
The trend of the
market
development
The share of different types of the
turbine company in different years
•The exploitation of wind-resources is
unbalanced.
•The current prevailing grid-connected model
has faced with a lot of problems such as high
cost, difficulties to sustain the stabilization of the
grid and so on.
1.Goal Setting
2. Decomposition
of the Goal 3. Strategy Directions
Proposed StrategyMarket Analysis and SWOTExternal Environment
Proposed Strategy 1: Positioning in the Value Chain
A turbine manufacturer or a wind-farm investor?
0%
20%
40%
60%
80%
2004 2005 2006 2007 2008
Domestic(Joint Venture) Foreign Investors
Wind Equipments Market Share in China
(Domestic and Foreign Investors)
The market share change for foreign
manufactures is declining in recent years and
domestic companies have lead the turbine
manufacturing industry.
Rank Institute Name
Patent
Numbers
Original
Country
Business Realm
1 GE 211 U.S.
Electrical
Manufacturing
2 Mitsubishi 211 Japan
Electrical
Manufacturing
3 (Person) Wobben Aloys 141 Germany
Wind Power
Generation
Equipments
4 Vestas 93 Denmark
Wind Power
Generation
Equipments
5 REpower System 63 Germany Wind Turbine
6 LM Glasfiber 56 Denmark Turbine Blade
7 Siemens 48 Germany
Electrical
Manufacturing
8 Ebara 47 Japan
Fluid Conveying
Equipment
9 Fuji Heavy 47 Japan
Electrical
Manufacturing
10 Gamesa 52 Spain Wind Turbine
Top 10 Institutes (People) with Most Patents in Wind
Energy Technology in DII Database
SK doesn’t have a technology advantage when competing with these
industry leaders.
It is not the proper time for SK to
become a turbine manufacturer in
China. SK could use its great
capital power to invest in the
construction of wind farms.
Proposed StrategyMarket Analysis and SWOTExternal Environment
Source: DII Database
ValueChainPositioning
State
Generators
Chinese
Developers
Foreign
Entrants
State
Generators
Chinese
Developers
Chinese
Developers
Foreign
Entrants
Local players
seeking
technical
expertise
The Clean Development
Mechanism (CDM) is an
arrangement under the Kyoto
Protocol allowing companies
from industrialized countries to
invest in projects that reduce
emissions.
By applying CDM joint
venture projects on clean
energies become possible in
China.
The Permitting Negotiations
are usually local, complex and
highly project-specific.
Foreign entrants seeking
cooperation with the state
generators under momentum
policies.
State Generators and
Chinese Developers lack of
expertise and advanced
technology.
Consultancy through value
chain is in need on issues like
site acquisition, components
manufacturing, CDM applying.
Foreign players
seeking vertical
integration(ownership
limited to 49% for
CDM qualification)
SK Energy could expand his
roles in the value chain and
create additional value.
Proposed Strategy 1: Positioning in the Value Chain
Site
Acquisition
Technical
Development
Permitting
Negotiation
Financing EPC Operation
Proposed Strategy 1: Positioning in the Value Chain
State Generators
Proposed StrategyMarket Analysis and SWOTExternal Environment
Case Study 1: AES’s role in a CDM Projects
Proposed Strategy 1: Positioning in the Value Chain
Project Title: Guohua Hebei Huanghua 49.5 MW Wind Farm
Project (Phase I)
Completion Date: 24th December 2008
What SK
may do
Project
Process
Outcome
About: AES operates
132 power generation
facilities worldwide.
Investor
Equity share: 49%
Guohua ASE
(Huanghua)
Wind Power
Co. Ltd.
Consulting
Merrill Lynch
Commodities
(Europe) Ltd.
Project Guohua
49.5 WM Wind
Farm Project
(Phase I)
GE, Vestas, Datang
Completion date: 12-24-2008
Invest via CDM Turbine SupplierFunding
Wind Energy Sells to
Yearly Capacity: 99,160WMh
North China
Power Grid
•33 wind turbines with the unit capacity of 1500kW and total capacity of
49.5MW.
•Generating greenhouse gas (GHG) emission reductions by avoiding CO2
emissions from traditional energy, and will contribute to sustainable
development of the local community and the host country by reducing
green house gas (GHG) emissions of 106,647 t CO2 per year.
Financial Indicator for the Proposed Project
IRR (Total Investment)
Benchmark Rate = 8%
Without CDM Revenue 6.24%
With CDM Revenue 9.58%
All Source: United Nations Framework Convention on Climate Change
CDM is a good way for foreign entrants to
invest in the wind energy market in China
which would greatly reduce the cost.
AES
Company
Proposed StrategyMarket Analysis and SWOTExternal Environment
Case Study 2: SK successfully
knocked the door of China’s
Petrochemical industry
Background:
•Petrochemical industry is the core and strategic industry that Chinese
government always wants to keep strong control of it, which impeding the foreign
energy companies’ entrance.
•SK tried hard to enter the China’s Petrochemical industry, finally succeed via
the relationship of Sino-South Korea relations.
SK’s Trial
SK’s Good Relationship with Governments
Studied the planned
Petrochemical
programs in China,
Seeking more
commercial
opportunities.
2006.4
Negotiated with
Hubei Province
Government on
the 0.8 million
tons Ethylene
projects.
2008.5
No break-
throughs were
made
1990
Firstly settled its
business in china
1992
Establishment
of diplomatic
relations. SK
as a bridge.
2008
The director of SK
accomplished the South
Korea president’s official
visit to China several
times.
What Can We Learn?
well
preparation
and careful
planning
good
relationship
and
coordination
+ =Win-win solution for
wind energy in China!
Good relationship and
coordination play an
important role in the trial
of SK to knocks the door
of China wind energy!
Connecting
two countries
Other competitors
competed for the
projects
0.8 million tons
Ethylene projects
in Wuhan
Proposed Strategy 1: Positioning in the Value Chain
SK Energy, Sinopec
Joint Venture
35% Equity
Before 2006
Proposed StrategyMarket Analysis and SWOTExternal Environment
South Korean
President’s official
visit to China to , SK
got approval of the
project.
2008.5.27
Outline
Background
Profitability
Market Size
Industry Analysis
Strategy Goal, Goal Decomposition and
Strategy Directions
External
Environment1 Market Analysis
&SWOT2 Proposed Strategies3
Policy Overview
SWOT Analysis
Sites & Modes
2nd Tier Region Off-grid Power
S2: Combination of
Carbon-free Industry
and Off-grid Power
U-Eco Cities in Northern
and Southern China
Conclusion: Wind
energy industry is very
promising in China in
future.
Conclusion: SK Energy
could join hands with
players in value chain to
seize great opportunities in
the vast and growing
market.
Proposed Strategy 2: Site Acquisition and Mode
Site acquisition: Tier-1 Vs. Tier-2
2-tier areas are more
competitive than 1-tier
areas.
Mode: Grid-Connected Vs. Off-Grid
Grid-Connected Mode
More prevailing, applied in most of
current projects.
Wind electricity should consolidated
to the State Grid.
Difficulty to maintain the
stabilization of the grid
High cost (0.5-0.6 yuan/kWh)
Off-grid mode is more
promising than grid-
connected mode.
Proposed Strategy 2: Site and Mode Selecting
Off-Grid Mode
More and more mature
Serves directly for the large scale
industry base
Increasing Government Attention
Low cost(0.05-0.06 Yuan/kWh)
Tier-1: “Three North Areas”
Market is relatively saturated.
Increasing rate reaching bottleneck
Disadvantageous Price
Lack of Industrial Integration
Tier-2: “Costal Areas”
Market is relatively saturated.
Increasing rate reaching bottleneck
Disadvantageous Price
Lack of Industrial Integration
Advantages
Proposed StrategyMarket Analysis and SWOTExternal Environment
1
2
Shandong
Northwestern
Hebei Base
Middle-southern
Liaoning Peninsula
Base
Combine the off-grid wind-power industry with the
development of Tianjin Binhai New District and the strategy
of Revitalizing the Old Industrial Base in Northeast China.
Reduce the CO2 and other toxic material emission.
Built Farms
Farms
Under-Construction
The market is
incompletely exploited;
SK has an opportunity to
seize!
Hebei
Liaoning
Tianjin
Why Bohai-Rim District?1
Integration of Off-Grid Wind Power with
Revitalizing the Old Industrial Base
U-Eco City in
Northern China
Long history of industries development, mainly
energy-hungry heavy industries
Firm support from the local government
Sound foundation of wind-power development
0
10
20
30
40
50
60
70
80
2000 2001 2002 2003 2004 2005 2006
Hebei Liaoning Shandong
’97-’06 Bohai-Rim District
Wind Energy Installed Capacity 104W
Booming Capacity2
3
Steel, Raw material,
Petroleum Fine Chemical,
electrolytic aluminum,
Chlor-alkali, seawater
hydrogen manufacturing
industries. Important ports
as Qingdao and Dalian.
Eastern Shandong
Peninsula Base
Proposed Strategy 2: The Combination of Off-Grid Wind Power with Two Industrial Bases
Proposed Strategy 2: Off-Grid Wind Power in Bohai-Rim Industrial Bases
Proposed StrategyMarket Analysis and SWOTExternal Environment
Zhejiang
Jiangsu
Combination of Off-Grid Wind Power
with Yangtze Delta Carbon-free Industrial Base
Shanghai-
Southern
Jiangsu Base
Northern
Zhejiang
Costal Base
Northern
Jiangsu Base
Combining off-grid
electricity with
carbon-free energy-
hungry industries
in Yangtze Delta,
develop the eco-
tourism.
Anhui
Jiangxi
U-Eco City in
Southern China
 The increasing demand for energy
 Rich wind resources and off-coastal land that
remain unexploited.
 Good Policy Environment
 The Yangtze River Delta boasts the advantage
to solve the technology and capital problems
Why Yangtze River Delta?
Built and Under-Construction Wind Farms in Yangtze Delta ’07
Current Status of Exploitation
Farm Numbers
Turbine
Numbers
Capacity %Nation
Shanghai 3 38 27.24 2.63
Jiangsu 3 244 85.80 8.30
Zhejiang 2 264 23.33 2.26
Total 8 546 136.37 13.19
Built Farms
Farms
Under-Construction
21
3
The market is
incompletely exploited;
SK has an opportunity to
seize!
Proposed Strategy 2: The Combination of Off-Grid Wind Power with Two Industrial Bases
Proposed Strategy 2: Off-Grid Wind Power in Yangtze Delta Industrial Bases
Proposed StrategyMarket Analysis and SWOTExternal Environment
Newly chemical
industries such as
Chlor-alkali Industry,
seawater hydrogen
manufacturing,
electrolytic aluminum
and steel, Power
Machinery industries.
Integrating the
shipbuilding, steel,
machinery industries
Experimenting u-Echo city
with combined application
of wind energy and IT
technologies.
U-Eco City
Realize SRI by enhancing
China renewable energy
development. CDM is the
main method.
SRI
Active part in Green Ocean
Strategy supporting energy
solution for in remote areas.
Green Ocean
Strategy
Lower the carbon-dioxide
release and achieve green
growth in electricity
generating.
Low Carbon
Using off-grid wind
electricity supporting
energy-hungry industrial
bases in China.
Off-Grid
Integration
Vision
Thank You!
LI Guang, liguang19881020@gmail.com
ZHAO Tian, zhao22306@hotmail.com
ZHU Sheng, zhu.sheng2@gmail.com
School of Management,
Fudan University
Rubicon Team

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When butterfly meets_wind_fudan university_rubicon team

  • 1. When Butterfly Meets Wind Strategy Proposal for SK’s Entrance into China’s Wind Market By LI Guang, ZHAO Tian, ZHU Sheng School of Management, Fudan University Rubicon Team
  • 2. Outline Background Profitability Market Size Industry Analysis Strategy Goal, Goal Decomposition and Strategy Directions External Environment1 Market Analysis &SWOT2 Proposed Strategies3 Policy Overview SWOT Analysis Roles Sites & Modes Manufacturer Investor S1: Positioning in Value Chain Case Study 1: AES’s success in CDM Projects Case Study2: How SK entered Petro Industry In China 2nd Tier Region Off-grid Power S2: Combination of Carbon-free Industry and Off-grid Power SK Vision: Sharing Happiness When Butterfly Meets Wind Conclusion: Wind energy industry is very promising in China. Conclusion: SK Energy could join hands with players in value chain to seize great opportunities in the vast and growing market.
  • 3. Outline Profitability Market Size Industry Analysis Strategy Goal, Goal Decomposition and Strategy Directions External Environment1 Market Analysis &SWOT2 Proposed Strategies3 SWOT Analysis Roles Sites & Modes Manufacturer Investor S1: Positioning in Value Chain Case Study 1: AES’s success in CDM Projects Case Study2: How SK enter Petro Industry In China 2nd Tier Region Off-grid Power S2: Combination of Carbon-free Industry and Off-grid Power SK Vision: Sharing Happiness When Butterfly Meets Wind Conclusion: SK Energy could join hands with players in value chain to seize great opportunities in the vast and growing market. Background China is in need of renewable energies in future. Wind energy development is booming around the world. Wind energy is a promising industry in China. Policy Overview Political will fuels wind energy industry in China
  • 4. With modern industrialization around the world energy crisis is becoming more and more manifest. The scarcity of traditional energies and negative impacts on the environment is becoming a global concern. Proposed StrategyMarket Analysis and SWOTExternal Environment Traditional Energy Increasing Demand for Energy in China Electricity’s Demand Growth, Supply Growth (Net Capacity Increase) and Generation Hours under Optimistic Expectation 4860 5250 5460 5411 5221 5015 5069 5194 5359 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 4400 4600 4800 5000 5200 5400 5600 5800 Demand Grow th Supply Grow th Pow er Generation Hours Source: China Galaxy Securities, 2008 Energy Insight Background Negative impacts of traditional energy CO2 Emission leads to global greenhouse effects. CO Incomplete burning of oil and coal, resulting in toxic gases emission. SO2 Resulting in acid rain, causing damage to the eco-system. Dust Increasing risk of Respiratory Disease. NOX Severely poisonous, giving rise to risks of lung cancer and other diseases Growing industries along with economic development in China strongly carrying the electricity market forward. With improved life qualities in China, living electricity driving the demand going up. Economic reconstructions push the application of renewable energies in China. Key Factors Affecting Demand China is in need of renewable energies!
  • 5. Country Share of New Installed Capacity 2008 All Source: World Wind Energy Report 2008, Global Wind Energy Council 0 20000 40000 60000 80000 100000 120000 140000 160000 180000 200000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E2010E 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% Total Installed Capacity MW Incremental Capacity MW Increment Growth MW World Total Installed Capacity and Incremental Capacity MW Wind energy development is booming around the world. Trend of Wind Energy Exploitation around the World 0 5 10 15 20 25 30 USA Germany Spain China India Italy France UK Denmark Portugal 2007 2008 Installed Capacity: Top 10 Countries MW Background Worldwide capacity reaches 121,188 MW, out of which 27,261 MW were added in 2008. Wind energy continued its growth in 2008 at an increased rate of 29 %. China continues its role as the most dynamic wind market in the year 2008. Summary Proposed StrategyMarket Analysis and SWOTExternal Environment
  • 6. Energies Overview 2000 2010E 2020E 0 20 40 60 80 100 120 140 2005 2006 2007 1H 2008 Wind Others Small Hydro Large Hydro Nuclear Coal 1.18% 1.80% 2.08% 0.74% China Annual Capacity Add Additions and Wind Energy Growth GW,% Source: China Galaxy Securities: Growing Wind Energy Source: China Galaxy Securities, 2008 Energy Insight Energy Structure in China Wind energy is a promising industry in China! Advantages of Wind Energy Background China’s electricity demand growth (9% to 10% annually) has created a capacity gap. Wind is evolving as one of China’s top four technology options for new capacity. With coal-fired electricity prices rising, wind is becoming more cost-competitive. Reliable, affordable and clean. Immense storage, easy access, and low marginal cost. . Wind projects under stable policy frameworks are less affected by the credit crunch than higher-risk investments. Wind energy is the answer to both the environmental and financial crisis! 2010E Proposed StrategyMarket Analysis and SWOTExternal Environment
  • 7. 2006.1 Renewable Energy Law Established the framework of the national exploitation of clean energies. 3 principles on wind were proposed: Implement fixed pricing to wind electricity power. State Grid unconditionally purchases the wind electricity. Price gap would be shared among the grid. The state establishes fund to support wind power development financially. 2006.10 NDRC Move (National Development and Reform Committee) improve the standard of subsidies and lower the qualifications of the companies to acquire loans from the bank and funds. 2007.8 Market Open Policy Long-term planning for the development of renewable energy Make the wind power market more competitive and open. Take advantage of coastal areas and inland wind resource. Targeting at a capacity of 5 MkW and 30 MkW in the year 2010 and 2020 respectively. To form the wind-power center in several provinces such as Inner Mongolia, Jiangsu, Shandong and Liaoning. 2008.1 Price Reform NDRC set the bottom line for the auction price of biding for the permission to exploit wind energy to avoid malign competition and attract more foreign investments. 2008.4 Financial Support The Ministry of Finance further reduce the tax imposed on the wind-energy companies. National Customs cut down tariff on importing advanced wind power technologies and equipments. Political will in China is striving for propelling wind-power market Policy Political Will Fuels Wind Energy Industry in China Proposed StrategyMarket Analysis and SWOTExternal Environment
  • 8. Outline Background Strategy Goal, Goal Decomposition and Strategy Directions External Environment1 Market Analysis &SWOT2 Proposed Strategies3 Policy Overview Roles Sites & Modes Manufacturer Investor S1: Positioning in Value Chain Case Study 1: AES’s success in CDM Projects Case Study2: How SK enter Petro Industry In China 2nd Tier Region Off-grid Power S2: Combination of Carbon-free Industry and Off-grid Power SK Vision: Sharing Happiness When Butterfly Meets Wind Conclusion: Wind energy industry is very promising in China in future. The wind energy market in China is vast, exploitation remains unbalanced Price of wind energy will become more competitive in near future. Overview of different players in the value chain. Profitability Market Size Industry Analysis SWOT Analysis
  • 9. Market Size Chief Distributions of Wind Energy in China 107W Year 2007-08 Installed Capacity Increments 106W Source: China Investment Annual 2005 Inner Mongolia Xinjiang Heilongjiang Gansu Jilin Hebei Shandong Jiangxi Jiangsu Guangdong Zhejiang Fujian Hainan 0 2 4 6 Inner Mongolia Liaoning Hebei Jilin Heilongjiang Jiangsu Gansu Xinjiang Shandong Guangdong Fujian Zhejiang Hainan 3.9 2007 2008 Increments Source: China Wind Energy Association 2009 2.61.30 Chief Distribution and Exploitation of Wind Energy in China 0 5000000 10000000 15000000 2000 2001 2002 2003 2004 2005 2006 2007 2008 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% Total Capacity MW Total Grow th Source: China Wind Energy Association, Century Securities Fastest Growing % Hainan 568.97 Zhejiang 311.04 Liaoning 142.52 Inner Mongolia 138.93 Hebei 126.00 Tier 1 Tier 2 Current Exploitation Energy Distribution China’s wind power resources mainly distribute in the eastern coastal areas and “Three-North Region”-- Northeast, North China and Northwest. Inland wind resource is larger than that of coastal areas. The risk of onshore investments are lower than those of offshore projects China’s Total Installed Capacity and Total Growth The wind energy market in China is vast, exploitation remains unbalanced. Investment on Wind Energy has been increasing exponentially in China at nationwide scale. The wind resources of eastern coastal areas remain unexploited compared to the “Three- North Region”. The markets of Tier-2 districts, with more potential to develop, grow much faster than that of Tier-1 districts. Proposed StrategyMarket Analysis and SWOTExternal Environment
  • 10. Profitability Estimated costs of Wind and Coal Energy 0.5 0.4 0.7 0.6 0.3 0.2 0.1 0 2000 2005 2010E 2015E 2020E Wind Energy Coal Source: Wind Energy 12 in China, China Galaxy Securities No. Name of wind plants Highest Price Yuan 1 Inner Mongolia ZhuRihe Wind Farm 0.609 2 Inner Mongolia Shangdu Wind Farm 0.609 3 Hebei Zhangbei Wind Farm 0.984 4 Xinjiang Danban City No.1 Wind Farm 0.533 5 Liaoning Donggang Wind Farm 0.915 6 Zhejiang Cangnan Wind Farm 1.200 7 Hainan Dongfang Wind Farm 0.560 8 Guangdong Nanao Wind Farm 0.740 9 Shanghai Chongming Nanhui Wind Farm 0.773 Average Price 0.769 2nd Tier 1st Tier The price of grid-connected wind electricity is greatly affected by the government’s policies. Price Differentiation and Cost Trends The price of grid-connected wind electricity by province (Highest) Current Pricing and Cost  In the current market the average price of electricity generated by wind farm is still higher than that of coal. The price disadvantage is the main barrier constraining further development of wind energy market. Future Prospect  In 2020, the estimated cost of wind electricity the cost of coal electricity, which will stimulate the widespread application of wind power. The application of CDM in joint venture projects could make wind electricity more competitive by generating extra revenue from CERs. Price of wind energy will become more competitive in near future. Proposed StrategyMarket Analysis and SWOTExternal Environment
  • 11. Industry Analysis Turbine Manufacturers Brand Manufacturer Capacity (kW) % of domestic and joint venture capacity % of increased total capacity Sinovel 华锐 1402500 29.71% 22.45% Goldwind 金风 1131750 23.98% 18.12% DEC 东汽 1053000 22.31% 16.86% Increased market share of Domestic and Chinese- foreign joint venture turbine manufacturers in 2008 Brand Manufacturer Capacity (kW) % of foreign owned capacity % of increased total capacity Vestas 599700 39.30% 9.60% Gamesa 508300 33.31% 8.14% GE 145500 9.53% 2.33% Increased market share of foreign owned turbine manufacturers in 2008 Brand Market status Main focus Guodian (Longyuan) A specialized wind power development company owning the largest shares of installed wind power capacity in China. Three North Region, Southeastern China. Case study: Jiangsu Rudong Wind Power Concession Project Datang Rank No.2 in China wind market ownership. With great impact in the Northern China electricity market. Northern China. Shanghai. Case Study: Shanghai Donghai Bridge Offshore wind farm. Huaneng The largest independent electricity generator in Asia. With solid government background. Inner Mongolia, Shandong, Sichuan, Guangdong, Case Study: Huaneng Zhaobei Wind Farm State Generators Top 3 State generators in wind market Summary of turbine manufacturers in China Sinovel, Goldwind and DEC capturing more than 57% of the market. Vestas, Gamesa and GE dominating among foreign manufacturers. With ambitious wind targets, state generators are harnessing strong capacity and political will to carry the market forward. All Source: China Wind Energy Association While turbine assembly manufacturing booming, key components witnessing shortage. Chinese OEMs to dominate supply market in the long term. Foreign entrants are seeking a foothold through near-term partnerships, with exploration targeting long- term pipeline activations. Proposed StrategyMarket Analysis and SWOTExternal Environment
  • 12. •Success in Korea Bellwether in the industry of Jeju Island, South Korea. Achievement in various energy fields around the world. •Green Ocean Strategy. Bring happiness to people by implementing SRI in green energy field. •Robust Financial Ability Fortune 500 Company and high reputation in China. •Expertise Several wind blade patents, goals to become one of the largest wind machine manufactures in the world. •Localization Localization of the business in China to be improved, developing coordination with the domestic companies and local government. •Policy The regulation of foreign capital to enter the energy industry •Market Share Insufficient infrastructure and facilities in China compared with the professional wind power companies, such as GE, Vestas, etc.. Strength Weakness Opportunity •Demand An answer to the world energy crisis and China’s rapid development •Competitor The low quality of domestic wind-energy investment companies. •Nationwide Support Attention of government on the clear energy and favorable policies towards . Threat •Financial Crisis Financial Crisis world widely impairs the process of huge investment for lack of the liquidity. •Entrance Cost High cost of the wind power and subordinated negotiation power when coordinated with State Grid. •Technological Uncertainties Some pending technological problems such stabilization of the grid due to the high levity of wind power. SWOT Table Proposed StrategyMarket Analysis and SWOTExternal Environment
  • 13. Outline Background Profitability Market Size Industry Analysis Strategy Goal, Goal Decomposition and Strategy Directions External Environment1 Market Analysis &SWOT2 Proposed Strategies3 Policy Overview SWOT Analysis Roles Manufacturer? Investor? S1: Positioning in Value Chain Case Study 1: AES’s success in CDM Projects Case Study2: How SK enter Petro Industry In China SK Energy could expand his roles in the value chain and create additional value. Conclusion: Wind energy industry is very promising in China in future. Conclusion: SK Energy could join hands with players in value chain to seize great opportunities in the vast and growing market.
  • 14. Strategy goal, goal decomposition and strategy directions Goal To enter China’s wind power market and explore “Green Ocean” strategy by investing in wind energy market of China. To cut down the cost and gain a higher profit To choose a niche market to enter and boost its share (Social Responsibility Investment) To secure its position as a top global “Low Carbon, Green Growth” company, to create and share happiness with Chinese people. Market Profitability SRI To Be a Pure Turbine Manufacturer or a Wind Farm Investor? To find a new wind-farm new potential areas and model Criteria Evaluation The difficulty to enter the market The Current Market Share The technology advantage The number of core technology patent main turbine manufactures The trend of the market development The share of different types of the turbine company in different years •The exploitation of wind-resources is unbalanced. •The current prevailing grid-connected model has faced with a lot of problems such as high cost, difficulties to sustain the stabilization of the grid and so on. 1.Goal Setting 2. Decomposition of the Goal 3. Strategy Directions Proposed StrategyMarket Analysis and SWOTExternal Environment
  • 15. Proposed Strategy 1: Positioning in the Value Chain A turbine manufacturer or a wind-farm investor? 0% 20% 40% 60% 80% 2004 2005 2006 2007 2008 Domestic(Joint Venture) Foreign Investors Wind Equipments Market Share in China (Domestic and Foreign Investors) The market share change for foreign manufactures is declining in recent years and domestic companies have lead the turbine manufacturing industry. Rank Institute Name Patent Numbers Original Country Business Realm 1 GE 211 U.S. Electrical Manufacturing 2 Mitsubishi 211 Japan Electrical Manufacturing 3 (Person) Wobben Aloys 141 Germany Wind Power Generation Equipments 4 Vestas 93 Denmark Wind Power Generation Equipments 5 REpower System 63 Germany Wind Turbine 6 LM Glasfiber 56 Denmark Turbine Blade 7 Siemens 48 Germany Electrical Manufacturing 8 Ebara 47 Japan Fluid Conveying Equipment 9 Fuji Heavy 47 Japan Electrical Manufacturing 10 Gamesa 52 Spain Wind Turbine Top 10 Institutes (People) with Most Patents in Wind Energy Technology in DII Database SK doesn’t have a technology advantage when competing with these industry leaders. It is not the proper time for SK to become a turbine manufacturer in China. SK could use its great capital power to invest in the construction of wind farms. Proposed StrategyMarket Analysis and SWOTExternal Environment Source: DII Database
  • 16. ValueChainPositioning State Generators Chinese Developers Foreign Entrants State Generators Chinese Developers Chinese Developers Foreign Entrants Local players seeking technical expertise The Clean Development Mechanism (CDM) is an arrangement under the Kyoto Protocol allowing companies from industrialized countries to invest in projects that reduce emissions. By applying CDM joint venture projects on clean energies become possible in China. The Permitting Negotiations are usually local, complex and highly project-specific. Foreign entrants seeking cooperation with the state generators under momentum policies. State Generators and Chinese Developers lack of expertise and advanced technology. Consultancy through value chain is in need on issues like site acquisition, components manufacturing, CDM applying. Foreign players seeking vertical integration(ownership limited to 49% for CDM qualification) SK Energy could expand his roles in the value chain and create additional value. Proposed Strategy 1: Positioning in the Value Chain Site Acquisition Technical Development Permitting Negotiation Financing EPC Operation Proposed Strategy 1: Positioning in the Value Chain State Generators Proposed StrategyMarket Analysis and SWOTExternal Environment
  • 17. Case Study 1: AES’s role in a CDM Projects Proposed Strategy 1: Positioning in the Value Chain Project Title: Guohua Hebei Huanghua 49.5 MW Wind Farm Project (Phase I) Completion Date: 24th December 2008 What SK may do Project Process Outcome About: AES operates 132 power generation facilities worldwide. Investor Equity share: 49% Guohua ASE (Huanghua) Wind Power Co. Ltd. Consulting Merrill Lynch Commodities (Europe) Ltd. Project Guohua 49.5 WM Wind Farm Project (Phase I) GE, Vestas, Datang Completion date: 12-24-2008 Invest via CDM Turbine SupplierFunding Wind Energy Sells to Yearly Capacity: 99,160WMh North China Power Grid •33 wind turbines with the unit capacity of 1500kW and total capacity of 49.5MW. •Generating greenhouse gas (GHG) emission reductions by avoiding CO2 emissions from traditional energy, and will contribute to sustainable development of the local community and the host country by reducing green house gas (GHG) emissions of 106,647 t CO2 per year. Financial Indicator for the Proposed Project IRR (Total Investment) Benchmark Rate = 8% Without CDM Revenue 6.24% With CDM Revenue 9.58% All Source: United Nations Framework Convention on Climate Change CDM is a good way for foreign entrants to invest in the wind energy market in China which would greatly reduce the cost. AES Company Proposed StrategyMarket Analysis and SWOTExternal Environment
  • 18. Case Study 2: SK successfully knocked the door of China’s Petrochemical industry Background: •Petrochemical industry is the core and strategic industry that Chinese government always wants to keep strong control of it, which impeding the foreign energy companies’ entrance. •SK tried hard to enter the China’s Petrochemical industry, finally succeed via the relationship of Sino-South Korea relations. SK’s Trial SK’s Good Relationship with Governments Studied the planned Petrochemical programs in China, Seeking more commercial opportunities. 2006.4 Negotiated with Hubei Province Government on the 0.8 million tons Ethylene projects. 2008.5 No break- throughs were made 1990 Firstly settled its business in china 1992 Establishment of diplomatic relations. SK as a bridge. 2008 The director of SK accomplished the South Korea president’s official visit to China several times. What Can We Learn? well preparation and careful planning good relationship and coordination + =Win-win solution for wind energy in China! Good relationship and coordination play an important role in the trial of SK to knocks the door of China wind energy! Connecting two countries Other competitors competed for the projects 0.8 million tons Ethylene projects in Wuhan Proposed Strategy 1: Positioning in the Value Chain SK Energy, Sinopec Joint Venture 35% Equity Before 2006 Proposed StrategyMarket Analysis and SWOTExternal Environment South Korean President’s official visit to China to , SK got approval of the project. 2008.5.27
  • 19. Outline Background Profitability Market Size Industry Analysis Strategy Goal, Goal Decomposition and Strategy Directions External Environment1 Market Analysis &SWOT2 Proposed Strategies3 Policy Overview SWOT Analysis Sites & Modes 2nd Tier Region Off-grid Power S2: Combination of Carbon-free Industry and Off-grid Power U-Eco Cities in Northern and Southern China Conclusion: Wind energy industry is very promising in China in future. Conclusion: SK Energy could join hands with players in value chain to seize great opportunities in the vast and growing market.
  • 20. Proposed Strategy 2: Site Acquisition and Mode Site acquisition: Tier-1 Vs. Tier-2 2-tier areas are more competitive than 1-tier areas. Mode: Grid-Connected Vs. Off-Grid Grid-Connected Mode More prevailing, applied in most of current projects. Wind electricity should consolidated to the State Grid. Difficulty to maintain the stabilization of the grid High cost (0.5-0.6 yuan/kWh) Off-grid mode is more promising than grid- connected mode. Proposed Strategy 2: Site and Mode Selecting Off-Grid Mode More and more mature Serves directly for the large scale industry base Increasing Government Attention Low cost(0.05-0.06 Yuan/kWh) Tier-1: “Three North Areas” Market is relatively saturated. Increasing rate reaching bottleneck Disadvantageous Price Lack of Industrial Integration Tier-2: “Costal Areas” Market is relatively saturated. Increasing rate reaching bottleneck Disadvantageous Price Lack of Industrial Integration Advantages Proposed StrategyMarket Analysis and SWOTExternal Environment 1 2
  • 21. Shandong Northwestern Hebei Base Middle-southern Liaoning Peninsula Base Combine the off-grid wind-power industry with the development of Tianjin Binhai New District and the strategy of Revitalizing the Old Industrial Base in Northeast China. Reduce the CO2 and other toxic material emission. Built Farms Farms Under-Construction The market is incompletely exploited; SK has an opportunity to seize! Hebei Liaoning Tianjin Why Bohai-Rim District?1 Integration of Off-Grid Wind Power with Revitalizing the Old Industrial Base U-Eco City in Northern China Long history of industries development, mainly energy-hungry heavy industries Firm support from the local government Sound foundation of wind-power development 0 10 20 30 40 50 60 70 80 2000 2001 2002 2003 2004 2005 2006 Hebei Liaoning Shandong ’97-’06 Bohai-Rim District Wind Energy Installed Capacity 104W Booming Capacity2 3 Steel, Raw material, Petroleum Fine Chemical, electrolytic aluminum, Chlor-alkali, seawater hydrogen manufacturing industries. Important ports as Qingdao and Dalian. Eastern Shandong Peninsula Base Proposed Strategy 2: The Combination of Off-Grid Wind Power with Two Industrial Bases Proposed Strategy 2: Off-Grid Wind Power in Bohai-Rim Industrial Bases Proposed StrategyMarket Analysis and SWOTExternal Environment
  • 22. Zhejiang Jiangsu Combination of Off-Grid Wind Power with Yangtze Delta Carbon-free Industrial Base Shanghai- Southern Jiangsu Base Northern Zhejiang Costal Base Northern Jiangsu Base Combining off-grid electricity with carbon-free energy- hungry industries in Yangtze Delta, develop the eco- tourism. Anhui Jiangxi U-Eco City in Southern China  The increasing demand for energy  Rich wind resources and off-coastal land that remain unexploited.  Good Policy Environment  The Yangtze River Delta boasts the advantage to solve the technology and capital problems Why Yangtze River Delta? Built and Under-Construction Wind Farms in Yangtze Delta ’07 Current Status of Exploitation Farm Numbers Turbine Numbers Capacity %Nation Shanghai 3 38 27.24 2.63 Jiangsu 3 244 85.80 8.30 Zhejiang 2 264 23.33 2.26 Total 8 546 136.37 13.19 Built Farms Farms Under-Construction 21 3 The market is incompletely exploited; SK has an opportunity to seize! Proposed Strategy 2: The Combination of Off-Grid Wind Power with Two Industrial Bases Proposed Strategy 2: Off-Grid Wind Power in Yangtze Delta Industrial Bases Proposed StrategyMarket Analysis and SWOTExternal Environment Newly chemical industries such as Chlor-alkali Industry, seawater hydrogen manufacturing, electrolytic aluminum and steel, Power Machinery industries. Integrating the shipbuilding, steel, machinery industries
  • 23. Experimenting u-Echo city with combined application of wind energy and IT technologies. U-Eco City Realize SRI by enhancing China renewable energy development. CDM is the main method. SRI Active part in Green Ocean Strategy supporting energy solution for in remote areas. Green Ocean Strategy Lower the carbon-dioxide release and achieve green growth in electricity generating. Low Carbon Using off-grid wind electricity supporting energy-hungry industrial bases in China. Off-Grid Integration Vision
  • 24. Thank You! LI Guang, liguang19881020@gmail.com ZHAO Tian, zhao22306@hotmail.com ZHU Sheng, zhu.sheng2@gmail.com School of Management, Fudan University Rubicon Team