China’s renewables revolution

Always from Eni, this study investigates the Chinese investments in renewables of the last years.

Investment in the Chinese renewables market hit some $11.8 billion in the first quarter of 2016. China overtook the US and Germany as the world leader in solar generation and its installed wind power capacity of 145 GW, even if not all of it is presently grid-connected, is the largest in the world. China is largely responsible for the worldwide prices of solar modules, which have fallen by as much as 80 percent, since 2009 […] Over the last five years, China’s investment in renewables increased from $39 billion to almost $111 billion in 2015, resulting in a 168-fold increase in solar power and a quadrupling of wind power. 

[…] Energy security continues to be a pressing issue in China. Since March 2014, the country has become the world’s largest net importer of petroleum and other liquid fuels, according to the EIA. Given current trends in demand and falling domestic production, China would have to increase its reliance on fuel supplies from the more unstable parts of the world such as the Middle East. Like many other countries including South Africa and the US, China’s power sector is finding it difficult to absorb the rapidly growing supply of renewable power. The national grid is finding it difficult to connect new sources of power, while battling grid congestion and balancing the system at both regional and national levels. This has resulted in 15 percent of wind farms and 31 percent of solar arrays being left idle due to the grid’s inability to accommodate them. […] The industry is racked by overcapacity, low profit margins and crushing amounts of debt. This has resulted in some plants standing idle and other companies such as Suntech going bankrupt. In addition, both Europe and the United States have accused China of dumpingits technology on world markets and imposed tariffs on China’s renewable hardware.

There are proposals to export electricity to neighboring power- hungry markets including Pakistan, India and Myanmar. This would benefit Yunnan’s chain of underutilized hydro-power plants along the upper reaches of the Mekong River next to the border with Southeast Asia. In addition, it has been reported that the State Grid has signed a memorandum of understanding with Korea’s power utility and SoftBank of Japan, to promote an interconnected grid in northeast Asia.

Technological innovation, economies of scale and rapid movement along the experience curve have made China’s solar and wind manufacturers and hydro-project builders pre-eminent. China’s potential in renewables is vast and while progress has been fast it has been uneven, leaving geothermal and biomass to catch up in coming years. The story of renewables in China is a move towards self-sufficiency in power, energy security and the erosion of coal power.