Chinese utilities’ ambitious renewable energy targets raise questions about costs, delivery

China’s six big state-owned power generating groups have set targets that could lift the country’s renewable energy generating capacity by almost half in the next five years, helping to realise its decarbonisation goals ahead of expectations.

Chinese utilities’ ambitious renewable energy targets raise questions about costs, delivery

By Eric Ng 

The revelation of the wind, solar and hydropower expansion plans has, however, raised questions about whether and how they will be realised, given a lack of clear policy support for financing the grid enhancement and energy storage facilities needed.

“The uncertainty is not about how much capacity can be installed, but rather whether other infrastructure will be there to support the increased capacity,” said Lin Boqiang, dean of Xiamen University’s China Institute for Studies in Energy Policy. “That is the biggest question.

”The plans are a clear sign that the companies are heeding President Xi Jinping’s call last year for China to hit peak carbon emissions before 2030 and become carbon-neutral by 2060. What is not clear, however, is how the costs of the infrastructure to support the rapid growth of intermittent wind and solar power will be shared among companies, consumers and government.

This growth entails the expansion and upgrade of the national grid, both in terms of hard infrastructure, such as power lines and energy storage facilities, and information technology systems to manage demand, supply and rising inter-regional power trading.

Their combined five-year renewable energy ambitions could see China Huaneng Group, China Datang Corporation, China Huadian Group, China Energy Investment Group, State Power Investment Corporation and China Three Gorges Corporation together add 400 gigawatts (GW) of capacity by 2025, according to their recent disclosures. This amounts to 44.4 per cent of China’s wind, solar and hydro capacity in December.

A more flexible distribution system is key to a successful transition from the relatively steady fossil fuels-dominated electricity system to one that relies much more on lower-carbon and more variable sources.

How does China generate its energy?

“There are no clear mechanisms for investors to fully recover the costs for those investments. The incentives for commercial investment are low, at least for now,” he added.Wind and solar farm developers may have to invest in or pay for energy storage and peak demand shaving infrastructure to facilitate the absorption of wind and solar energy for future projects, under a proposal floated last month by the National Energy Administration (NEA) for industry consultation.

The power distributors will most likely continue to expand grids and inter-regional power trading, but probably limit their investment in energy storage and grid enhancements for renewable energy absorption, if the government does not allow them to fully recover their costs, Zhang added.

China’s first Hualong One nuclear reactor begins commercial operations

China’s first Hualong One nuclear reactor begins commercial operations

This may result in a rebound in curtailment of wind and solar power, and may trigger thresholds for provincial governments to delay or stop approving new projects under the current regulatory framework.

This means curtailment rates – the proportion of wind and solar power output dropped by the grid – may rise but not revisit the peak of 17 per cent seen in 2012 and 2016, Zhang said. It stood at 3.4 per cent last year.

The NEA Absorption Monitoring Centre last month warned that curtailment would rise this year after a record 56.3GW of wind farms were installed in last year’s fourth quarter, an increase of 360 per cent year on year. Solar farms installation more than doubled.

China vows carbon neutrality by 2060 during one-day UN biodiversity summit

China vows carbon neutrality by 2060 during one-day UN biodiversity summit

There is a conflict between “relatively low” end-user power prices and surging power distribution costs due to a growing differential in power demand across seasons and rising renewable energy supply, State Grid Corporation of China, which operates power grids in all but five southern provinces, warned this month.

A target to add 400-500GW of renewable capacity over the next five years by China’s power industry would be commendable, as it would put the country ahead of its previously stated ambitions, said Xiamen University’s Lin.

The ambitions set out by President Xi involve more than doubling wind and solar capacity to 1,200GW and lifting the target for non-fossil fuels’ contribution to China’s total energy consumption from 20 per cent to 25 per cent by 2030.

Originally published at South China morning post