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20 August 2014
John Mathews - Former Visiting Fellow at SPERI & Professor of Strategic Management, Macquarie University, Sydney
Solar, wind and other renewable sources are now starting to offer a genuine, cost-effective alternative to complete reliance on fossil fuels
China is known as the world’s largest user and producer of coal and the world’s largest emitter of carbon dioxide and other greenhouse gases. But China is also building the world’s largest renewable energy system – which by 2013 stood at just over 1 trillion kilowatt hours, larger than the combined total of electrical energy produced by the power systems of France and Germany. The question arises: what are the drivers and implications of this shift towards renewables, and what does it mean – for China, and the world?
China’s drive to create the world’s largest renewable energy system is widely recognised. Dr James Hansen, a prominent climate scientist, asserts in a recent posting that ‘China is now leading the world in installation of new hydropower, wind, solar and nuclear electricity generation’.
The most recent data for 2013 lends support to Dr Hansen’s assertion. Three sources of data may be drawn on: data on installed capacity (measured in gigawatts of power); data on electricity generation itself, where different sources are allocated according to different capacity factors; and investment data. Together, these sources place China’s energy strategies in a fresh light.
In terms of installed capacity, China now has the largest electric power system in the world, rated at 1.25 trillion watts (TW) and exceeding the US power system’s capacity, which is rated at 1.16 TW. Renewables (water, wind, solar) now account for 30% of China’s capacity, although coal still accounts for 69%. It’s still a very black system overall.
The leading edge in capacity expansion is demonstrably getting greener. In 2013 China added 94 GW of new capacity, of which 55.3 GW came from renewable (hydro, wind, solar PV) sources and just 36.5 GW from thermal (mostly coal) sources. China also added just 2.2 GW of nuclear capacity in 2013.
Installed capacity is one thing; actual electrical energy generated is another. By 2013 China was generating a total of 5,322 billion kWh (or TWh), including nearly 4,000 TWh from thermal power stations and just over 1,000 TWh (or 20%) from renewable sources. The official target from the National Development and Reform Commission (NDRC) in China is for this proportion to rise to 30% of the electric energy to be generated by 2020.
The most revealing sign of the renewable energy revolution is from the investment data. Since 2007 the share of investment in renewable electric generation has increased steadily, from 32% of the total in 2007, passing 50% in 2011 and reaching 59% in 2013. Adding the investment in nuclear power, the proportion of investment on all non-fossil fuel-based electric generation increased from 37% in 2007 to 75% in 2013. Over the same period investment in thermal power plants declined from 62% to 25%.
China’s is a very large electric power system. As noted, it is now larger than that of the US. In terms of the slow-moving total system, China now has 20% of its total electrical energy generated sourced from renewables, while 30% of its generating capacity is built on renewables. (The difference is due to the lower capacity factors of renewable generating sources – themselves improving year by year.) The leading edge is clearly greener than the total system, which is why we can predict that the direction of change of the total system will move further towards greater reliance on renewables.
This is great news for China. It means that its energy security is being enhanced, through increasing reliance on an energy source that it can maintain for itself – namely, its manufacturing system that is churning out huge numbers of wind turbines, solar cells and other renewables devices. It’s also the case that the black pollution of sky and water is finally being curbed.
And it’s great news too for the world, because it means that China’s carbon emissions are likely to peak, and then start to fall, as the renewable energy revolution bites, and green power sources supersede black, coal-fired sources. Of course, it won’t happen overnight – but what other strategy shows anything like comparable chances of mitigating carbon emissions and thereby slowing climate change?
China’s experience in driving down costs of renewables through capturing economies of scale is also good news for all other developing countries. It means that solar, wind and other renewable sources are now starting to offer a genuine, cost-effective alternative as a fundamental source of power compared to previous complete reliance on fossil fuels.
The clean energy revolution is about to go global – thanks to the cost reduction results that China has achieved.
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