China Direct

Battery Battles - US EV strategy - Macro Polo

US favours securing EV supply chains over subsidizing consumers

Given the blowback from US allies on the Inflation Reduction Act’s (IRA) Clean Vehicle Credit, the US Treasury Department has responded by amending some sourcing requirements. If these changes are implemented as planned in March, they will modestly ameliorate allies’ concerns by allowing “friend-shoring” of certain parts of the electric vehicle (EV) battery supply chain. But the changes won’t make it much easier for EV manufacturers to qualify for the full $7,500 EV tax credits.

So when it comes to the competing goals of securing a domestic EV supply chain versus consumer subsidies to accelerate EV adoption, as highlighted in our previous analysis, the US administration appears to have made its choice in prioritizing supply chains over faster adoption.

In fact, the IRA’s subsidy scheme is similar to China’s that once excluded those EVs with foreign batteries from qualifying for subsidies. The main difference, of course, was that China already had its own domestic battery manufacturers.

Full analysis can be accessed here.

Our thanks to Macro Polo for kindly making this insight available.

BP signs MoU to help China go green

CBI member, BP, has announced that it has signed an MoU with one of China’s leading solar project developers, JinkoPower Technology (JinkoPower), to provide integrated decarbonised energy solutions and services to customers in China.

The partnership aims to see BP and JinkoPower develop an innovative, integrated energy solution business, delivering renewable power and “Energy-as-a-Service” digital tools for commercial and Industrial customers in China. 

China is the largest and fastest growing renewable energy market in the world, and the country aims to reach 50% of power generation from non-fossil fuels by 2030. JinkoPower is one of the largest private solar project developers in China, and Jinko Solar has been the leading global solar module supplier for four consecutive years.

According to BP’s press statement, this MoU will bring together the skills and experience of both partners in solar development, distributed energy resources (DER) and digital technology, to deliver energy solutions to help decarbonise and optimise customers’ operations.

The MoU was signed in Shanghai last month by Simon Yang, BP China president and BP senior vice president, regions, cities & solutions for China and Xiande Li, chairman of JinkoPower and Jinko Solar. It was witnessed by Dev Sanyal, BP executive vice president, gas & low carbon energy, and other attending leaders of both sides.

Dev Sanyal said: “BP is committed to reimagining energy for people and the planet, and to supporting the energy transition to a low carbon future. Our partnership with JinkoPower aims to leverage BP’s leading experience in energy management and digital platforms, with JinkoPower’s world-class solar capabilities, to provide customers with integrated, low carbon Energy-as-a-Service offers.”

Simon Yang, BP China president and BP senior vice president, regions, cities & solutions for China, commented: “China is the world’s largest and most advanced solar market and one of the most important markets for bp to achieve its low carbon ambitions. We look forward to working with JinkoPower on renewable energy solutions to further contribute to the country’s energy transition, environmental protection and ecological progress.”

The partnership supports BP’s ambition to become a net zero carbon company by 2050 or sooner and to help the world get to net zero.

To read the press release in full, please follow the link.

BP sets net zero 2050 ambition

Please find CBI Member BP's 2050 Net Zero ambitions (bilingual) attached for your reference.

Our sincere thanks to BP's China team for sharing with CHINA DIRECT.

Download Bp-sets-ambition-for-net-zero-by-2050-fundamentally-changing-organisation-to-deliver

Download 新闻稿_BP壮志满怀，提出到2050年实现净零的全新远景

 

Shell in UK-China battery investment deal

 

CBI member, Shell has announced that it has agreed a multi-year, power offtake deal with two Chinese state-owned enterprises invested in two 50MW batteries located in the town of Minety in Wiltshire. Shell plans to use the batteries to provide back-up power to the national grid.

The energy facility in Minety comprises of two 50MW batteries and is being developed by CNIC – China’s sovereign wealth fund – and state utility firm, China Huaneng Group. The project is expected to be completed by the end of 2020. The Minety project will be built using more than 80% China-made equipment, China Huaneng said, when it announced the start of construction on the project at the end of December.

David Wells, Shell Energy Europe, vice president, said: “"Projects like this will be vital for balancing the UK's electricity demand and supply as wind and solar power play bigger roles in powering our lives. […] Batteries are uniquely suited to optimising power supplies as the UK moves towards a net-zero carbon system."

Power from the project, designed to balance intermittent wind and solar output on the UK grid, will be traded by Shell’s specialist Limejump subsidiary, which is claimed to manage the largest network of batteries in the UK. The deal marks the latest inroad into the power sector by Shell, whose interests in renewables and clean energy now include major solar developments, offshore wind project stakes, the floating wind pioneer Eolfi and Tesla’s rival in the battery storage space, Sonnen.

To read the press release in full, please follow the link.

Toyota accelerates in China market

 

CBI member, Toyota has announced that it plans to extend its partnerships with leading Chinese automobile manufacturers, such as BYD, and ride-hailing group, DiDi, to significantly improve its market share in the China market.

Toyota currently only has a 5% share of the China market, and remains far behind other foreign – predominantly German – car makers such as BMW, Audi and Mercedes. Consequently, 5 months ago, Toyota CEO, Akio Toyoda, journeyed west to capture the attention of China’s automobile market.

Since coming in April, Toyota has signed deals with BYD and Contemporary Amperex Technology to develop batteries for electrified vehicles and invested $600 million in DiDi. Building on these initial investments, Toyota teamed up with Chinese start-up unicorn, Pony.ai to carry out a pilot programme for autonomous driving in July, which resulted in the Japanese marque joining Baidu’s self-driving car programme, Apollo.

As Chinese consumers become further entrenched in a trade war with the US, the Japanese group has benefited in a turn in fortunes. While reduced consumer spending saw China’s automobile market fall by 11.4% over the last 12 months, Toyota saw sales rise by 12%.

Mr. Toyoda said: “The potential rewards for Toyota are immense. Especially in this market, China, the speed of change is very, very fast. [Toyota] have to make a lot of effort to follow the changes in China. That’s the biggest issue for us.”

Company executives reportedly see China as one of the few markets where Toyota has the potential to sell its broad line-up of electrification technology used in hybrids, electric cars, and fuel cell vehicles. Beijing wants to become the world’s champion in fully electric vehicles by 2025, after all.

BP partners with DiDi to charge China’s new energy vehicle network

 

CBI member, BP has announced that it will enter into a joint venture with China’s leading ride hailing service provider, DiDi. The joint venture company will focus on developing new energy vehicle charging infrastructure across China to cater to the country’s developing NEV market.

Initially, the joint venture partnership will only focus on the installation and development of charging infrastructure. However, both companies have reported plans to extend the JV to include collaboration in areas such as loyalty programmes, convenience services and vehicle maintenance.

Yang Xiaoping, Chairwoman and President of BP China said: “China has provided tremendous growth opportunity for BP. Through cooperating with DiDi, BP will be able to actively provide differentiated products to cater to China’s fast-growing new energy vehicle charging market and further expand our brand presence in China.”

Fan Tu, CEO of BP’s downstream business said, “China is the world’s largest new energy vehicle market and presents tremendous opportunity for determining a business model that is both innovative and scalable. [BP] believes that entering into a joint venture with DiDi is the right way to respond to this fast-changing market. Moreover, by being in partnership with DiDi, BP will be to further expand its advanced mobile travel business globally, promoting energy transformation and low carbon solutions across the world.”

BP’s first NEV charging station has already been installed in Guangzhou in Guangdong Province and has the capability to charge 10 cars simultaneously on currents ranging between 60-100kw. It will subsequently be re-branded in light of the JV and serve as a model for the company’s expansion across China.

 

BP flying high with China Aviation fuel deal

 

CBI member, BP has announced that its subsidiary, BP Aviation, has entered into a joint venture agreement with China Aviation Oil Group Company, to develop the provision for the distribution of aviation fuel in Southwest China; principally Sichuan, Guizhou and Chongqing.

After receiving regulatory approval from the relevant authorities, the joint venture company will be committed to supporting the growth and development of China’s commercial aviation industry. There is huge market potential, considering that China’s commercial aviation industry is expected to boom between now and 2020, with aircraft in China’s airspace racking up over 2 million flying hours and the number of planes in China’s skies numbering over 5,000.

John Platt, CEO BP Aviation said: “[BP] are pleased to extend [what has been a] successful partnership between BP Aviation and China Aviation Oil. Through combining BP Aviation’s world-renowned business management best practise and innovative fuelling technologies, with the business networks and local expertise of China Aviation Oil, our two companies can look forward to continuing to deliver long-term sustainable development for China’s aviation industry.”

Prior to the signing of this latest joint venture, BP Aviation has managed two other joint venture contracts with China Aviation Oil; these are Shenzhen Chengyuan Aviation Oil and Huanan Blue Sky Aviation Oil Company. Through partnering with these two companies, BP provides aviation fuel to 29 airports in central and southern China.

Yang Xiaoping, Chairman and President of BP China said: “This newly signed joint venture contract not only demonstrates BP’s continued confidence in the China market, but also reaffirms BP’s commitment to supporting China’s transformation through continuous innovation and industrial growth.

ExxonMobil puts foot on gas with Zhejiang Energy LNG Deal

CBI member, Exxon Mobil has announced that it has signed a sales and purchase agreement with Zhejiang Provincial Energy Group for liquefied natural gas supply. The deal, which was signed on Monday, will see Exxon Mobil supply Zhejiang Energy with 1 million metric tonnes of LNG annually over 20 years.

Peter Clarke, senior vice-president of LNG at Exxon Mobil said, “This sales and purchase agreement represents an important milestone and provides a solid foundation for our strategic partnership with Zhejiang Provincial Energy Group [and…] developing a major LNG gateway in the Ningbo-Zhoushan region. [ExxonMobil] looks forward to continuing our support for Zhejiang Energy during the construction, commissioning and operation of its [new] Wenzhou LNG receiving terminal.”

Zhejiang Energy is building a $1.3 billion receiving terminal for the fuel in Wenzhou, with an annual handling capacity of 3 million tonnes. Zhejiang Energy will partner with Chinese state oil and gas major, Sinopec for the development of the terminal. ExxonMobil already has another separate long-term supply agreement with Sinopec in China, extending the two companies’ collaboration in the market.

China has been ramping up its efforts to import LNG over the past few years. The country imported more than 53 million tonnes of LNG last year, which accounts for 60% of total natural gas imports. Consequently, the Chinese government has sought foreign investment in the country’s LNG infrastructure to help boost China’s capacity to handle greater LNG flows.

Regular readers of China Direct may remember that back in the September of last year, Exxon Mobil announced that it had agreed with Chinese officials to invest $10 billion in an LNG terminal and petrochemicals plant in Guangdong province.

This is part of the company’s efforts to diversify their global portfolio, and includes diversifying further into the LNG supply chain and better catering to the needs of the China and Asian energy markets.

Mitsubishi to invest in UK green energy

CBI member, Mitsubishi Corporation has announced that it will acquire a 20% stake in the UK-based innovative energy service provider, OVO Group.

OVO Group is an energy supply company based in Bristol. The company hopes to revolutionise domestic energy supply, by utilising digital technologies, such as AI and IoT, to position itself as an energy ‘platformer’ and improve the management of the supply of energy from renewable sources.

Mitsubishi Corporation’s existing investment portfolio in renewable energy in Europe predominantly concerns offshore wind power generation. The company has plans to expand its presence in Europe and its role as a leading supporter of innovation within the sector.

Mitsubishi Corporation issued a press release highlighting how: “This investment in OVO is not only an opportunity for Mitsubishi Corporation to contribute to developments in the industry by establishing a new type of energy business that makes use of digital technology; it also stands to stimulate more growth in what is currently a very stable business portfolio by strengthening [Mitsubishi Corporation’s] operations in the service sector and downstream business.”

The specifics of the deal see Mitsubishi Corporation obtain 20% of shares in OVO and will dispatch a director to join OVO’s management team. The acquisition is part of Mitsubishi Corporation’s Midterm Corporate Strategy 2021, which aims to incorporate digital technologies and make them a core part of Mitsubishi’s business across all sectors.