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China – even more renewables

By Dave Elliott

China continues to be a global leader in renewables. The nation has more wind power (now at 169 GW) and solar PV (over 100 GW) than any other country and, on 2016 data, a world-beating 554GW of renewables in all, including hydro. There is more to come. The 13th Five Year Plan (2015-2020) proposed targets for energy efficiency, the reduction of carbon intensity and diversification away from fossil fuels, with non-fossil fuels providing 15% of primary energy consumption by 2020, up from 7.4% in 2005.  But China’s National Energy Administration (NEA) is also considering raising the 2020 solar target to 150 GW, which would lead to about 21 GW of annual installation between 2016 and 2020. The Five Year Plan also proposed to increase the installed capacity of wind to 250 GW by 2020.

Under the plan, China is to invest 2,500 billion Yuan ($361 billion) in renewables by 2020, which will create over 13 million jobs, according to the National Energy Administration (NEA). The National Development and Reform Commission said solar power will receive 1000 billion yuan, wind 700 billion, hydro 500 billion and geothermal 300 billion

These plans are clearly ambitious. However, they may be exceeded. Certainly the pace of change is very dramatic. For example, China is said to be installing two wind turbines every hour. And with costs falling, it may well exceed both its wind and solar targets.

For comparison, it’s envisaged that there will be 58 GW of nuclear capacity in operation by 2020, up from 29.4 GW in mid-2016, which then supplied around 2% of its power, though the World Nuclear Industry Status Report says that ‘the 21 units with 21.5 GW under construction will not be sufficient to reach the target. And the average construction time of the 25 units that China brought on line over the past decade was 5.7 years and many of the units under construction encounter significant delays. It appears therefore practically impossible for the country to reach its 2020 nuclear target’.

Certainly renewables are doing much better than nuclear. Wind output overtook that from nuclear in 2012 and renewables overall, including large hydro, supply more than ten times the output from nuclear. The new renewables – wind and PV – may well soon overtake hydro.  However, there are some constraints on the new renewables, including oversupply issues. For example, after a boom in demand for PV in China, it’s fallen back and there is now a glut in cell production. China produced 27 GW of PV modules in the first half of 2016, a 38% rise on 2015, and installed 20 GW in China, three times more than in 2015. But growth in demand then slowed, leading to a boom in cut-price exports and global market price falls. Dumping issues aside, that may be fine for consumers, but for the industry it can lead to major problems – a classic boom-bust syndrome.

PV is also having oversupply problems of a different kind: some of the output from China’s still expanding solar capacity is wasted due to weak local grid links – 39% in Gansu Province and over half in Xinjiang. The same problem has been apparent for wind power for some time: see my earlier posts. Nationally, technical restraints and bottlenecks in the grid are leading to regular output curtailment of around 15% of total available wind output. That is one reason why, although having twice as much wind capacity in place (169GW) as the USA (82GW), China only got 241 TWh from it in the last year, compared with 224 TWh in the USA.

Curtailment of green power is clearly wasteful in energy terms and it also has an economic impact on generators. To lessen that, new supply rules are also being introduced, including a requirement to directly compensate renewable energy generators for curtailment, with the costs to be paid by conventional generators, except in certain cases, such as unplanned maintenance of transmission lines, when grid companies will be responsible. There are already rules stating that all the output from renewables must be used, but they have not been very effectively applied, and the new policy seeks to guarantee this, with central government agencies now being responsibility for planning this rather than, as formerly, provincial government agencies. 

That on its own will, of course, not stop curtailment, although it may lead the agencies to develop better grids. But as an interim measure, while grid systems are improved, China is slowing PV and wind project growth in some areas where grid and congestion issues are currently a problem. The NEA has said that no new solar power capacity will be added before 2020 in Gansu, Xinjiang and Ningxia provinces due to high curtailment, and no new wind power plants will be approved in Jilin, Heilongjiang, Gansu, Ningxia, Inner Mongolia and Xinjiang between 2017 and 2020, because of high power wastage. Longer term, however, it plans to raise its storage capacity by ten-fold to 14.5 GW by 2020 to avoid wasting surplus energy, with improved local and national grids also being developed. It also aims to set new technical standards on solar products to speed up technological progress and eliminate outdated high cost low efficiency capacity.

So, the pace may slow in some areas, and there has clearly been a slow down in PV. However, overall progress should continue. A recent MIT study, looking at the power system constraints, suggested that, with careful attention to location and grid links, wind might produce 26% of China electricity by 2030. The wind resource, both on land and offshore, is certainly large (in the 1-2 TW range), and hopefully, despite the grid integration problems in this huge country, much more of it can be exploited in the years ahead, along with the large PV solar and biomass resource.

Longer term it is conceivable that, given attention to energy efficiency, renewables could expand to cover the bulk of electricity needs and possibly much of energy use overall. That is certainly the conclusion of the various NGO and academic scenarios that have been produced, e.g. see WWF’s scenario. Also the China National Renewable Energy Centre has an 85% power and 60% all energy 2050 scenario.

However, there is still a way to go. And much more needs to be done, on coal and oil replacement and energy efficiency especially, with transport, as ever, being one of the key problem areas, not least in terms of air pollution. Future energy patterns will depend heavily of the rate of economic growth. That has been falling in China while its energy intensity is stabilizing. And the potential is there for significant carbon reduction longer term. See, for example, David Toke’s new book for Routledge ‘China’s Role in Reducing Carbon Emissions‘.

In the shorter term, there is some good news on coal cutbacks, with coal mining and coal-fired generation being cut. The NEA says thatbetween 2016 and 2020, we plan to halt construction or suspend building of new power plants with a total capacity of 150 GW, and shut down 20 GW of outdated capacity’.

More would be good and seems possible given the right policies. As a 2016 Berkeley Lab report noted, China actually already has more coal capacity than it needs, but not enough flexible balancing capacity, and certainly efforts are now  being made to respond to these issues.

Clearly China needs to cut coal more and get better at planning and especially grid linking, and with more widely distributed and directly-delivered local PV being installed, along with storage and better grids, some grid congestion/balancing issues may be reduced.

* I will be looking at Japan and India in my next post. By 2016 Japan had got over 71GW of renewables, including 45 GW of PV solar, India nearly 91 GW. But they are also both planning to expand coal use – and also nuclear. That contrasts with Taiwan, which has decided to phase out nuclear and ramp up renewables rapidly. So too has South Korea.

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