Generating more electricity from renewable energy is a critical strategy for reducing China’s carbon emissions. 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. Anders Hove, renewable energy expert and a consultant at the Paulson Institute, gives an update on China’s remarkable renewable energy growth and some key challenges to be overcome.
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 recent targets of non-fossil energy are 15% in 2020 and 20% in 2030, an increase from nearly 12% in 2015. The goal is to increase to at least 110 GW of solar and 210 GW of wind by 2020. Although these targets will likely be exceeded, China faces huge challenges to improving grid integration of renewable energy.
How do China’s efforts compare with other 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 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, 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—still accounting 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 up 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 less than 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 densely populated Eastern provinces like Hebei. Most power experts believe wind and solar curtailment result more from policies than technology issues. 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, a 2016 Paulson Institute report suggests that 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?
China’s 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 the 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.
Are the U.S. and China competitors or allies on renewable energy?
China and the U.S. represent different parts of a global renewable energy value chain, and so the two countries’ industries could work in complementary ways. While China dominates large-scale manufacturing, the U.S. dominates clean energy research and development, and continues to produce high-value-added manufacturing tools for export. A 2012 study by the U.S. National Renewable Energy Laboratory showed that in the solar sector, U.S. exports of tools and equipment roughly equaled its imports of finished or intermediate solar goods. But many U.S. renewables manufacturers view Chinese makers as a commercial threat. Since 2012, the U.S. has imposed punitive tariffs on Chinese solar manufacturers for allegedly unfairly undercutting U.S. manufacturers.
In coming years, two new trends are likely to emerge with respect to wind and solar. First, renewable energy demand is likely to shift towards the developing world, including Latin America, Africa, and developing Asia. Second, U.S. companies such as GE could emerge as a key competitor for the build-out of regional high-voltage power grids in places like India and Southeast Asia. And U.S. solar manufacturing equipment will likely help such countries create their own domestic manufacturing capabilities. As David Danielson, Assistant Secretary for Energy Efficiency and Renewable Energy at the Energy Department, said in 2013, “Innovation could drive down costs and drive up efficiencies not only in PV manufacturing, but also in the production of other high-tech and high-value clean energy technologies, and position U.S.-based manufacturers to be leaders in one of the most important global economic races of the 21st century.”