Utility of renewable energy in China’s low-carbon transition
arge scale renewable energy deployment is core to China’s energy transition. Although China’s electric power consumption will continue to increase in the long-term, its consumption increases have started to decelerate since 2012. This has become a key moment for China’s transition to low-carbon energy and power industries. In recent years, electric power sources have become diversified, while thermal power has become cleaner; the increasing share of renewable energy has become a clear trend. In 2017, renewable energy encompassed 36.6% of China’s total installed electric power capacity, and 26.4% of total power generation. According to Energy Production and Consumption Revolution Strategy 2016-2030, by 2030, 50% of total electric power generation will be from non-fossil energy sources, including nuclear and renewable energy. Renewable energy will shift from meeting new electricity needs to replacing existing electricity needs that have been traditionally satisfied by thermal power productions. It is expected that renewable energy will become the main power source by 2030.
In recent years, annual proportion of renewable energy in new installed capacities have gradually increased. In 2017, renewable electric power capacity (including mid-to-large sized hydropower) stood at two-thirds of the power industry’s new installed capacity. This set a new record, after renewable energy encompassed to surpass 50% of the new installed capacity in 2013. New installed solar power capacity stood at 53.1GW, which was over half of the global new solar power capacity. At the same time, new installed wind power capacity stood at 15 GW, taking approximately one-fourth of its global new installed capacity. Additionally, hydropower and biomass power stood at 12.9 GW and 2.7 GW, respectively. China’s power industry’s installed capacity increase remains at a significant pace, while there is a clear trend towards low-carbon power compositions (Figure 1).
The replacement of thermal power by renewable energy can be more clearly observed from an investment perspective, under which the share increase is even faster. Total investment in the power sector in 2017 stood at RMB 765.4 billion (USD 113.4 billion), of which 85% of the investment (USD 96.6 billion) went towards renewable energy (Figure 2). Even without counting investments in mid-to-large sized hydropower systems, renewable energy still stood at 77% of the total electric power investments. Divided by types, wind and solar power investments encompassed 18% and 48% of the investments in power sector in 2017. While renewable energy investments have continued to increase, thermal power investments have shown a trend of decrease. Meanwhile, conventional hydropower development in the late 12th-Five Year Plan period have become saturated, causing hydropower investments after 2013 to quickly contract. It is therefore evident that China’s energy transition strategy and renewable energy support policies have effected very pronounced investment directions. In addition, cost decreases in renewable energy also had a stimulating effect to the associated sector’s investments.
From a power generation perspective, however, the severe impact of renewable energy on newly added electricity has not increased steadily. In terms of total power generation, renewable energy’s increase has also been slow. Figure 3 shows that renewable energy investments, as part of total electric power investments, have entered a stable growth trend; while post 2007, its share in new installed capacity has also been in a generally increasing trend. Yet, its fluctuations in electricity replacement have severely increased. In 2015, in addition to meeting new electricity demands, renewable energy, for the first time, began to replace thermal electricity stores. However, in 2016 this trend experienced a great reversal; until 2017, renewable energy share of new electricity generation has dropped to 34.1%. Under the current economic growth slowdown and power supply surplus, these fluctuations reflect the tension and polarity between the thermal power and renewable power industries. They also reveal the difficulties of the national energy transition strategy at the local levels.