China’s daring energy strategy

China’s daring energy strategy

In absolute terms, China is now the world’s largest greenhouse-gas emitter, accounting for more than 25% of the global total. Even in per capita terms, it has just overtaken the European Union average, while still at only half the US level. This reflects an electricity system based 70% on coal, as well as China’s global leadership in heavy industries such as steel, cement, and chemicals. But China is already by far the biggest investor in wind and solar power and is now canceling plans for further coal investment. And as China builds a low-carbon economy, it enjoys a massive resource advantage.

A recent report by the International Energy Agency includes a color-coded map showing which areas of the world have the most wind and solar resources. The largest lies in China’s sparsely populated western provinces of Tibet, Qinghai, Xinjiang, and inner Mongolia. In principle, covering just 5% of that total land area in solar panels could supply China with 6,000 TW hours of electricity per year, meeting its entire current electricity demand (the wind resource is also massive).

Source: Teske et al. (2017), Renewables Global Futures Report based on Edenhofer et al. (2011), Special Report on Renewable Energy Sources and Climate Change Mitigation.

Patience and planning, the millenary tactic of China

China’s thirst for energy has fueled its incredible economic development over the last two decades, although the challenges of achieving independence from coal is the main cause of environmental damage and pollution, the Chinese believe they have a strategy to solve these challenges, and by doing so can further develop their own economy and improve energy security as well as saving our planet.

The Chinese energy strategy is simple:

  1. electrify everything
  2. clean up the power system

The Chinese energy strategy is simple: a) electrify everything and b) clean up the power system. Bringing power to all the people of China at a low cost has been a core part of the Chinese economic miracle; and the results are astounding: Since 2000, China has added enough power generation capacity to meet the combined electricity needs of Japan, India and Germany. And in recent years the build out of renewables has been nothing short of remarkable. China, for instance, added over 50GW of new solar capacity to the grid last year, which is more than the total solar capacity of the United States.

Beyond creating bluer skies, that are achieved with renewables, China also wishes to own its energy supply chain and related technologies and has already produced a whole host of global leaders such as Trina Solar and LONGi in solar, Goldwind in wind turbines, Shanghai Electric and Dongfang Electric in power generation, Huawei and Sungrow in power electronics, and BYD and CATL in batteries.

China also believes that by pushing the electrification of transport faster and harder than other countries they can develop a sustainable competitive advantage against the incumbent motor vehicle producers and global leaders from the US, Europe and Japan. The statistics speak for themselves. There are over 100 million electric scooters on Chinese roads.  One Chinese city Shenzhen has electrified its whole bus fleet and has more electric busses (16,000) on its roads than the US and Europe put together. And China sold and produced more electric cars last year than the US and Europe combined, not to mention being the No1 producer of lithium-ion batteries as well as being the dominant processor of key raw materials that go into these next generation vehicles such as cobalt, lithium, graphite and rare earth metals.

The sun of the east

Solar energy projects have put China at the forefront of the renewable energy sector.

The United States and Japan invented many of the key technologies for solar panels from half a century ago to the present day. But they didn’t decide to build very large factories, fearing that they would have to lower prices below cost to sell all the panels. Now, Chinese panels are very cheap, so they have wiped out their Western competitors, especially in recent months.

Chinese companies as JinkoSolar and Trina Solar, the world’s largest manufacturers of solar panels, made significant investments in production. Their automated plants produce impressive quantities of panels with consistent quality and increasingly at a lower cost.

With those knowledge, Chinese companies have been able to realize sales in some of the world’s fastest growing solar panel markets, such as India and Saudi Arabia. In addition, they are making adaptations to this technology for developing markets, which will require innovative low-cost solutions to meet their climate goals.

Ambitious projects

A Sungrow worker connects floating solar panels on a lake created after coal mines collapsed in Liulong, China. Credit Adam Dean for The New York Times.

Many recent visitors to Beijing have been pleasantly surprised by blue skies rather than smog. In part, the cleaner air reflects heavy-handed policies: polluting factories have been moved away from the capital and other major cities, and coal-fired heating systems have sometimes been closed down before alternative gas facilities have been put in place.

This is where China’s grand vision comes in. In recent years, China has faced the energy-transformation challenge domestically. China’s best supplies of renewable energy (especially wind and solar power) are in Western China, while most of China’s population and energy demand are concentrated on the Pacific (eastern) seaboard. China has been solving this problem by building a massive distribution grid based on ultrahigh-voltage transmission, which minimizes heat loss along the way. Long-distance UHV transmission is efficient and economical and China has made major strides in developing this technology.

Thinking big, China has created an impressive organization – the Global Energy Interconnection Development and Cooperation Organization – to bring together national governments, grid operators, academic institutions, development banks and United Nations agencies to launch the global renewable energy grid.

GEIDCO is mobilizing research and development on several key technology challenges, such as large-scale energy storage, superconductivity in power transmission and artificial intelligence to manage large interconnected power systems.

China’s proposed global energy interconnection – based on renewables, UHV transmission and an AI-enabled smart grid – thus represents the boldest and most inspiring global initiative by any government to achieve the goals of the Paris climate agreement.

Given this scenario, is the world prepared to adjust to the Chinese strategy?

Clean energy is given a boost rather because of its economic, national security and political stability advantages than because of an idealistic commitment to save the planet.

World coal consumption was never as high as in 2013 and 2014. After falling between 2014 and 2016, global demand rebounded in 2017 and rose again last year. From now until at least 2023, the International Energy Agency has predicted that demand will remain stable. The Asian giant’s coal consumption will continue to fall in the coming years, also for the United States and Europe. However, the longer-term outlook is uncertain.

Although dependence on oil may be decreasing, the volatility of fossil fuels will not have such an effect on the economy, the market will have time to arrive and adapt to the new energy model, the concept of self-consumption is the most republican of all, so they will continue with the development of solar photovoltaics and renewables.

In summary, the Chinese energy strategy is multi-pronged. It is about bringing a global competitive advantage in key future industries such as energy and transport. But mostly, it is a conscious strategy against the growing dependence of the Chinese economy on energy exporters such as Russia, OPEC and the United States.

These achievements are helping pave the way for China to become the energy superpower. Let us hope that power is used for the good of all.

Priscila Scheel| Energy Consultant

By | 2019-05-21T10:33:55+00:00 May 21st, 2019|Categories: Electricity Markets, Energy Markets, Energy Policies, Featured, M·Blog|Tags: , , |Comments Off on China’s daring energy strategy