Advancing sustainable growth in the United States and China

Renewable Energy in China

As part of the Paris Climate Agreement signed in December 2015, China made ambitious commitments to peak carbon emissions by 2030 or earlier. To reach those goals, the current Five Year Plan includes ambitious targets for scaling up renewable energy use. Renewable energy resources—such as wind, solar, and hydro—provide the main alternatives to coal and are essential for China’s transition towards a low-carbon economy.

What goals has Beijing established for renewable energy?

China has constantly updated its ambitious planning targets to promote renewable energy. If you include nuclear energy in the calculation, China’s non-fossil energy targets are 15% in 2020 and 20% in 2030, which translates to at least 110 GW of solar and 210 GW of wind by 2020. The renewable energy sector is racing ahead: Electricity generation from solar power grew by 72% in 2016, with a cumulative generation of 66 TWh in 2016. Wind power generation rose 30% in 2016. That said, though the government’s targets will likely be exceeded, China faces huge challenges to improving grid integration of renewable energy.

How do China’s efforts compare with global leaders in renewables?

By some metrics, China is a clear leader when it comes to installed capacity of renewables. China’s installed solar PV capacity surpassed that of Germany in 2015, reaching 77 GW at the end of 2016. China added 34 GW of new solar PV in 2016, more than the total PV capacity in all but three other countries (Japan, Germany, and the U.S.). China has over 30 times as much solar energy today as the entire world did 15 years ago. Similarly, in wind, China reached 148 GW of capacity in 2016, almost double the capacity of the U.S. In hydroelectric capacity, China has over 300 GW, far more than second-ranked Brazil at 100 GW. China is also a leading world manufacturer of both solar and wind equipment, including for export. And, importantly, China is becoming a technology leader: its leading solar companies produce high-quality panels that meet—and can even exceed—international standards. Trina Solar, for example, set a new world record in efficiency for mono-crystalline solar cells in 2016.

However, by other measures, China lags behind. In 2016, despite rapid growth, solar generated just 1% of China’s electricity (below the world average of 1.8%), wind just 4%, and hydro 19%. Other countries, such as Denmark and Germany, generate a far larger share of electricity from renewable energy. Several American states and European countries have ambitious plans to transition to high renewable energy shares of electricity production. While some Chinese provinces, such as Qinghai, also boast high renewable shares, China’s coal power capacity—with still accounts for 65% of the total electricity generated—is too large for wind and solar to make much of a dent.

One of the major challenges for scaling renewable energy use is integrating it onto the power grid. Because of underdeveloped power markets and regulatory barriers to sending power between provinces, China’s renewable electricity is often wasted or “curtailed”. In 2016, China wasted 17% of its wind energy, for example, compared to under 1% in Texas and Germany, both of which had far higher wind capacity in proportion to total power demand than does China. Some Chinese provinces wasted far more: Gansu lost 43% of its wind energy in 2016, and Jilin wasted 30%.

Is distance the main barrier to wind and solar integration?

While some point to the vast distances between the country’s windy northwest provinces and the populous coastal region, wind and solar curtailment remain severe even in populated eastern provinces like Hebei. Most power experts believe wind and solar curtailment are a policy issue, more than a technology issue. A recent study by Michael Davidson of MIT showed that specific power reforms—namely, sharing renewable energy over a wider area—could eliminate curtailment in China’s northeast without adding new transmission. Similarly, in 2016 a report by the Paulson Institute suggested China’s Jing-Jin-Ji region pilot a regional spot market to help wind from Hebei reach nearby Beijing, which currently imports coal electricity from Shandong, Shanxi, and Inner Mongolia.

What role does the coal sector play in China’s renewables transition?

Coal still accounts for 62% of China’s total energy mix, and the state-owned coal power sector and provincial protectionism are often cited as political-economic obstacles to power reforms that would place greater priority on wind and solar. Most provinces in China have over-built coal plants, and are reluctant to import renewable electricity from neighboring provinces for fear of affecting local jobs, local tax revenue, and balance sheets of provincially-owned power plants. “Despite available import capacity, the preferred strategy has been to develop local supply, even to the point of exacerbating the overall excess supply situation,” write Hu Xinmin and Ian Yao of the Lantau Group.

To loosen the grip of coal, the national government has banned new coal plants in 29 provinces and halted construction of over 100 coal plants—an indicator of how earlier planning efforts by central government agencies failed to slow provincial coal build-outs at local levels. While the national government has repeatedly issued orders that require priority dispatch of renewable energy, recent power reforms focus primarily on bilateral power contracts lasting between one month to one year—with little progress on spot markets, renewable energy dispatch, or increasing the flexibility of interprovincial trading. For its part, State Grid has planned a vast, global energy interconnection nominally centered on integrating renewable energy. But the state-owned company recently constructed high-voltage power lines within China carrying mainly coal energy, such as the new line from Inner Mongolia to Shandong that passes through Beijing.[i]

By Anders Hove (Last updated 10/4/2017)

[i] See “全国可再生能源电力发展监测评价的通报,” which shows that the Ximeng-Shandong line carried 0% renewable energy.