What are the key opportunities in renewables for UK startups looking at China?
Think about the UK and our offshore wind industry for a second. We have 10.4GW of offshore wind installed now which, until earlier this year, was the largest in the world. We need to reach 40GW of offshore wind by 2030 to reach net-zero carbon emissions by 2050. Boris Johnson wants to power every home in the UK using offshore wind. In UK terms, quadrupling our offshore wind capacity in less than a decade is a huge ambition. Then you come to China, a country of 1.4 billion people, which is trying to transition from a coal-heavy energy mix to a carbon-neutral energy mix by 2060. China’s goal is to build 50-60GW of wind energy (including onshore and offshore wind) per year to reach 3000GW total capacity by 2060. The way in which China scales things, and must scale things, is so different from anywhere else in the world.
Can you elaborate on the opportunities for UK startups?
I was recently in Shandong Province, Northeast China for the Yantai Low Carbon Conference. We met with two of the region’s main manufacturers, Dajin and CIMC Raffles. Dajin makes steel towers for offshore wind turbines, supplying all the leading OEMs (Original Equipment Manufacturers) in Europe; CIMC Raffles makes the vessels and floatation devices needed to install and float turbines. The UK is great at innovative engineering and design, and there are many SMEs finding smart and creative ways to push industries forwards, from manufacturing remotely operated subsea vehicles to using digital twins (digital representations of a physical counterpart) to optimise wind farm performance. Working with large manufacturers creates opportunities for SMEs to have their products and designs used at scale.
What about the opportunities in offshore wind and energy storage markets?
China is about to cut its subsidy for offshore wind and the industry has been wondering how to deliver projects at grid parity (where the energy price is as cheap as other alternatives, like coal). The market is also exploring ways to onboard energy storage to support the integration of renewables into the grid. UK companies have the experience here. Offshore wind in the UK is cheap, around £40/kwh, and the companies that helped pull the price down have a chance to provide this expertise in the Chinese market.
Is China a complementary market for the UK’s renewable energy industry?
The UK has excellent research and development, legal, professional, financial services, project financing and development, front-end engineering and design, and operations and maintenance capabilities. China is excellent at manufacturing and construction and is the world’s leading global investor in infrastructure. There are many synergies here and little competition between our supply chains. I’m reminded of Wilson Peng, an Associate Director at Aon (the UK-headquartered insurance broker) who does a great presentation on the importance of insurance in the Chinese market. It usually starts with a video of a turbine collapsing or damage to a vessel (neither of which are uncommon in China) and he’ll say something like: “We all want offshore wind projects to go well, but what happens when suddenly a turbine collapses or your cable breaks, what will you do? Here’s how we can help.” It’s tongue-in-cheek but insurance infrastructure is second nature to UK projects in a way that it isn’t in China. And there lies an opportunity.
What are your practical tips for UK startups?
Do your market research, think through how you are managing your IP, and find the right Chinese partner. If you are looking for support or advice, reach out to the DIT and find your International Trade Advisor (ITA) on great.gov.uk. In China, if you’re looking at renewables, hit me up. The wider DIT team here covers everything from tech to fashion to hydrogen. International Trade Advisors can also introduce you to the Enhanced International Support Service (EISS), which provides support for companies with a turnover of more than £500k that are interested in a specific market and have a product or service to offer. If you’re interested but your turnover is less than £500k, EISS may still be able to support you, so it’s worth asking.
Is there anything else you’d like to mention around renewables?
As you can probably tell, I think renewables is the sector to work in right now. We have a once-in-a-generation opportunity to transition our energy industries from being extremely carbon intensive to being carbon neutral. China is the world’s largest carbon emitter but also the largest investor into green energy. There is no solution to climate change without China. If you’re a company that can bring some influence to bear—now that’s really exciting.
This article was written by an independent third party and the views contained within are not necessarily the views of Barclays. This article is designed to help you with your independent research and business decisions. This page contains link(s) to third party websites and resources that we (Barclays) are not providing or recommending to you. The information contained in this article is correct at the time of publishing. We recommend that you carry out your own independent research before you make any decisions that will impact your business.
Barclays (including its employees, Directors and agents) accepts no responsibility and shall have no liability in contract, tort or otherwise to any person in connection with this content or the use of or reliance on any information or data set out in this content unless it expressly agrees otherwise in writing. It does not constitute an offer to sell or buy any security, investment, financial product or service and does not constitute investment, professional, legal or tax advice, or a recommendation with respect to any securities or financial instruments.
The information, statements and opinions contained on this page are of a general nature only and do not take into account your individual circumstances including any laws, policies, procedures or practices you, or your employer or businesses may have or be subject to. Although the statements of fact on this page have been obtained from and are based upon sources that Barclays believes to be reliable, Barclays does not guarantee their accuracy or completeness.