The development of offshore wind power infrastructure in China is stronger than ever. With its 2023 generation capacity at 37.8GW, China accounts for 71% of global offshore wind capabilities. The industry itself is known to require large investments given the high capital expenditure needed to construct sufficient infrastructure. Over the past decade, green financing, and specifically green bonds, have been the secret to the success of wind power development in China. In this article, I explain this crucial role of green financing in China’s offshore wind expansion and show how leveraging green financing to construct a solid infrastructure that supports development can serve as an example to other countries.
Green finance involves investments and loans that support low-carbon economic development. It provides sufficient capital for low-carbon industries, drives the energy transition in high-emission sectors, and often includes financial incentives, such as lower interest rates, green bonds, or tax breaks—making sustainable projects more cost-effective and attractive to investors. Could green finance be a pathway for corporate and individual investors to contribute toward scaling up energy transition?
As our world is lagging behind the United Nations (UN) sustainability goal of maintaining global targets of 1.5 degrees Celsius, initiating the right corporate and individual financing instruments and incentives is as important as ever when it comes to reversing the impact of carbon emissions. Indeed, countries have recognized the importance of establishing proper infrastructure, especially in “developing” countries. This year, the Conference of the Parties (COP) UN Climate Conference agreed to triple financing to developing countries to US$300 billion per year till 2035. However, funding for these nations may prove to be ineffective if solid financial systems are not in place.
Let’s dive into some of the key challenges when it comes to its expansion.
Challenges Offshore Wind Energy Faces
The greatest barriers to offshore wind adoption are the high capital expenditures needed to build the projects, as well as adequate funding for Research and Development (R&D) to advance its technological capabilities. Using a traditional financing format, investors are encouraged to put their money in industries with short return cycles and high profits, such as real estate and healthcare. Thus, niche renewable sectors like wind power find it challenging to obtain sufficient funding for project development. Only targeted green investment pathways can ensure sufficient development for industries like offshore wind.
China’s Green Finance Ecosystem and Its Assistance to Corporate Development
China’s green financing journey began in 2015 when the People’s Bank of China released a policy document for the green financial market. The share of green loans since the initiative has increased from 7.2% to 12.7% of total loans from the top 21 financial institutions in China. China has been a leader in the initiation of fixed-income instruments for green financing, and has surpassed 130 billion in green debt funding in 2023. This shows the importance of an established green financial system and its benefits to raising investment attention to clean initiatives.
Offshore wind developers such as China National Offshore Oil Corporation(CNOOC) and Ming Yang Smart Energy have effectively leveraged green bond financing to build up their industry-leading projects. We will come back to the successes of these projects financed by green investments later in the article.
Other Government Incentives in China
In addition to establishing a green finance ecosystem, China has also created green finance pilot zones in less developed regions to foster green innovation. Green finance zones, including Huzhou in Zhejiang province, have benefited from financial incentives like subsidies to attract green finance institutions to relocate to these zones. Other local governments such as Gansu province are enhancing green R&D incentives for corporations through one time interest discounts, re-financing, and insurance subsidies. Actions like these from lower-level governmental entities reaffirm the alignment in the green transition and provide investors with confidence in the consistency of green strategy actions across various levels of the Chinese government.
Successes
China’s green finance ecosystem has greatly benefitted offshore wind projects. Below are the most successful projects in China that are approved for development:
Top Offshore Wind Projects in China
Project | Capacity (MW) | Stage | Completion Year | Project Owner |
Shanwei Jieshi Offshore Wind Farm | 3000 | Pre-Construction | 2026 | China Guangdong Nuclear New Energy (Lufeng) |
Hainan CZ7 Demonstration Offshore Wind Farm | 1500 | Pre-Construction | 2026 | CNOOC (Hainan) New Energy |
Hainan CZ9 Demonstration Offshore Wind Farm | 1500 | Construction | 2026 | Hainan Mingyang Smart Offshore Windpower Development |
Guangdong Jieyang Qianzhan 1 Offshore Wind Farm | 1200 | Pre-Construction | 2028 | State Power Investment |
Hainan CZ2 Demonstration Offshore Wind Farm | 1200 | Construction | 2028 | Hainan Shenneng New Energy |
Source: Black Ridge Research
Actions of influential banks in China have also been aligned with governmental decarbonization goals through the issuance of green bonds and green loans. These bonds are all issued with specific use of proceeds specified, and are allocated to specific projects. The financial deals listed below cover the wind power/offshore wind sector and present an opportunity for investors.
Notable Green Financing Issuances by Chinese Banks
Date Issued | Instrument Type | Issuer | Financing Amount (USD) | Related Investment Focus |
March 2022 | China Merchants Bank | $400 million | Wind Power | |
June 2022 | Bank of China (Frankfurt) | $522.8 million | Wind Power | |
2021 | Industrial Bank (Mainland China) | $922 million | Onshore & Offshore Wind | |
March 2022 | China Merchants Commerce Leasing | $410 million | Offshore Wind | |
CGN Wind Energy Limited | ||||
2019 | China Construction Bank | $1.6 billion | Low Carbon Transport, Wind
| |
2019
| Bank of China | $350 million | Low Carbon Transport, Wind, Solar |
The Role of Individual Investors
Individual investors are also crucial for providing capital to green financing projects. They can be the catalyst to drive market demand for green bonds and ESG funds and increase corporate sustainability standards.
Individual investors—particularly high net worth individuals (HNWI)—can contribute through three pathways:
Investing personal wealth into green financial instruments that have a focus on offshore wind projects
Advocating for the establishment of green finance infrastructure in developing countries
Showcasing the value of green finance instruments to wealth management professionals.
As seen in China’s case, a well-structured and established green finance ecosystem can overcome barriers for industries with intense capital expenditure requirements and open the feasibility of projects through sufficient R&D that can advance the industry as a whole. With the high-power generation capacity of offshore wind, the industry definitely presents a solid investment opportunity and offers a sustainable route to decarbonization.
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