By 2030, China’s power market will have more than doubled in size with more than half of new power plants built for renewables, according to a white paper published by Bloomberg New Energy Finance (BNEF) recently.
Booming Power Sector
BNEF’s white paper outlines how China’s power sector is set to double, with 88 gigawatts of new power plants added per year from now until 2030 — more than half of which is expected to be for renewables, according to the researchers’ ‘Central Scenario’.
It is estimated that China’s power sector could attract investment as high as US$159 billion per year, with around half going to renewables. As a result of a cleaner energy mix, the report shows how the country’s total power sector emissions could begin to drop as soon as 2027.
Key reasons for the rapid clean energy growth includes:
- Improving economics of wind and solar PV owing to falling technology costs
- Increasing costs for coal-fired plants due to greater environmental controls
- Uptake of distributed solar PV in China’s commercial sector
However, the authors impart that coal will continue to grow rapidly until 2022, with an average of 38 gigawatts added a year. After that though, growth will finally slow to 10 gigawatts a year until 2030, according to the research.
Jun Ying, country manager and head of research for China at Bloomberg New Energy Finance, said: “China has started to change course towards a cleaner future. But despite significant progress in renewable energy deployment, coal looks set to remain dominant to 2030. More support for renewable energy, natural gas and energy efficiency will be needed if China wants to reduce its reliance on coal more quickly.”
China’s Future Mix
BNEF’s research team also produced what it believes to be the world’s first forecast of a Chinese carbon price. They write that an average carbon price of US$16 during 2017-2030 would help the government peak emissions as soon as 2023.
As well as a strong carbon price, stimulating China’s cleaner supply mix will be driven by increasingly competitive renewable energy costs, already a path China is pursuing through greater renewables investment. According to earlier BNEF research, China was the world’s largest wind market in 2012. The country has also been reported as aiming to double solar power capacity this year.
Michael Liebreich, chief executive of Bloomberg New Energy Finance, said: “It is hard to underestimate thesignificance of China’s energy consumption growth and its evolving generation mix. The impacts will reach far beyond China and have major implications for the rest of the world, ranging from coal and gas prices to the cost and market size for renewable energy technologies – not to mention the health of the planet’s environment.”
Changhua Wu, Greater China Director, The Climate Group, commented: “As the scenarios in BNEF’s white paper map out, China is on the track towards a low carbon energy future. The tipping-point will come when we achieve the maximum level of energy saving — through technology innovation and consumer behavior change, coupled with rapid scale-up of distributional energy supply by enhancing smart grids.
“But to support this clean energy growth, continued certainty and clarity of strong policy incentives is key, and in particular, efforts should be made to reduce subsidies to fossil fuels. Fiscal and taxation policy must be designed to attract investment in clean energy and energy saving. Advancing technology capability and innovation will also be critical to ensure renewable energy solutions work solidly, with high technical stability.
“Transformation of existing fossil fuel-based energy infrastructure must also take place in order to clear the barriers to rapid scale-up of clean energy deployment. Already I am delighted to see that a further enhanced clean energy policy regime is shaping up in China, that will drive the country’s energy clean revolution and internalize into a national development strategy, reflecting the country’s ambition to build a green, low carbon and circular economy.”