Analysis & Reviews

Renewables It's Bigger Than You Think

Renewable Energy: Bigger Than You Think

Renewable energy is a hot topic, particularly after the Paris agreement at COP21. With 194 countries agreeing to reach net-zero greenhouse gas emissions in the second half of this century, carbon-free sources of energy will be very much sought-after. Plans to reach 100% of renewable energy even appear here and there. Too far-fetched? Maybe not… Scotland reached 97% last year according to WWF; some even mention 99% for Costa Rica.

China is neither Scotland nor Costa Rica but here too renewables are big and growing.

Wind and solar already on the rise in China

In less than ten years, China has become a global leader, in both the manufacturing and installed capacity of renewables. Every year brings its own superlative; in 2014, China added 55GW of renewable energy, more than four times the US’ 13GW, second on the list.

In 2015, China spent USD111 billion on clean energy infrastructure1, almost as much as the US and Europe combined. 2016 might be no exception with announced ambitions to add 20GW and 15GW of wind and solar power respectively.

In 2014, China added +55GW of renewables, more than four times the US

In 2015, China spent more on clean energy infrastructure than the US and Europe combined.

(click on chart to enlarge)

2000 2020 China Installed Capacity Wind Solar

China’s renewables are growing fast, and sometimes even faster than the plans laid by the government. Over the last few years, official targets have been raised several times. Most recently in October last year, China raised its 2020 solar target from 100GW to 150GW – up from 43GW in 2015 – only one year after releasing the original target. This sounds ambitious, but how does it compare with king coal?

Renewables grow while coal wanes

Coal remains the main source of power in China, accounting for 70% of electricity generated vs. 22% for renewable energy in 2014. However, since 2013, renewable energy capacity has grown faster than coal’s. On top of that, the utilization rate of China’s coal power plants is declining, raising overcapacity concerns.

Both in 2014 and 2015, despite the decade-low price of coal and the increase of power generation capacity, the electricity generated from coal actually decreased. The central government has recognized the overcapacity risk and plans to establish a warning mechanism to control coal-fired power plants construction and production. Simultaneously, central government wants to prioritize transmission of renewable energy over thermal power.

In other words, coal is waning whereas renewable energy is on the verge of booming. And this is good news not only for climate and air pollution, but for water as well.

Renewable energy transition will benefit water as well

Renewables can contribute to reduce water stress on top of limiting carbon emissions and air pollution. One main reason is that wind turbines and solar PV require almost no water to operate whilst thermal power plants can prove very thirsty – more on that on China Water Risk in the next weeks.

Moreover, the majority of wind and solar potential is located in the parched North China, where most of China’s coal mines and coal power bases also lie. This overlap could help transition from coal to wind and solar thereby alleviating pressure on water resources. Such a transition might be bigger and faster than we think.

The bulk of the renewable energy boom is yet to come

China has no renewable energy target beyond 2020 but numerous studies have forecasted or proposed development roadmaps. The chart below shows some of those that extend to 2050. As can be seen, most of the growth of renewable energy will come from solar and wind, while hydropower is expected to cap at around 500GW – it should be noted that the two scenarios with the lowest renewable energy capacity assume the adoption of Carbon Capture and Storage (CCS); this technology allows to burn coal without emitting carbon but its technological and economic feasibility in the future remains highly uncertain.

2015-2050 China installed capacity of renewable energy

There are two simple ways to interpret these respective 2050 capacities and the associated growth: exponentially or linearly. When assuming an exponential growth, wind & solar capacity would grow annually by 7.4% to 10.3% between 2015 and 2050, i.e. doubling capacity every 7 to 10 years. When considering a linear growth pattern (closer to what we observed for coal during the last decade), then these scenarios require adding between 52GW and 141GW of wind & solar capacity every year until 2050, to be compared to the record 42GW added in China in 2015.

No matter how you look at it, the bulk of the renewable energy boom is yet to come. However, renewable energy alone won’t be enough to peak carbon emissions around 2030 and reach net-zero GHG emissions by the second half of this century. This challenge is also bigger than we think.

Fossil fuels still represent around 90% of China’s primary energy consumption

Electricity is only one form of energy and only accounts for around 20% of the final energy consumed in China. Looking at the primary energy instead (i.e. including all sources of energy before transformation) offers a more relevant picture of China’s energy situation.

In 2014, coal accounted for 66% of China’s primary energy. Around half of that coal was used to produce electricity while the other half was mainly used for industry and heating purposes. Solar and wind are paling in comparison, representing a mere 1.4%2 in the same year (see chart below).

2000-2030 China Non Fossil Fuel in Primary Energy Consumption

Altogether, non-fossil fuels (i.e. renewable energy + nuclear) accounted for 11.2% of China’s primary energy consumption. China officially committed to increasing that number to 20% in 2030. This apparently slow progress illustrates how deep the challenge is: the required energy transformation goes way beyond adding more solar panels and wind turbines.

The required energy transition goes way beyond solar panels and wind turbines

The reduction of energy demand is as important as increasing renewable energy capacity (more on this here). Several factors are now helping China in this endeavour such as a slower economic growth and the declining demand for energy intensive products (e.g. steel & iron, cement). Other essential efforts should be made to increase energy efficiency in buildings and industry and to reduce the material throughput of our economy and lifestyles.

Other significant challenges lie ahead in terms of grid infrastructure and management, storage systems and/or demand side management, electrification of cars and public transportation to mention a few.

Tomorrow’s energy landscape will be nothing like today’s. Massive amounts of renewable energy remains to be installed, while radical transformations must be conducted on the consumption side as well. A huge challenge indeed, but one that also presents a vast array of opportunities.


1 Clean energy infrastructure investment includes renewable energy excluding large hydro, low carbon services and energy smart technologies.
2 These figures are computed using the coal equivalent formulation, as used in official Chinese targets. When using calorific approach (as used by the IEA for instance), solar and wind represent share is even lower at 0.6%.

Further Reading

  • China Water Risk’s 5 Trends for 2016 - Prioritizing environment alongside employment signals a reshuffle. To show it’s serious, China will “kill a chicken to warn the monkey”. The Year of the Monkey brings with it wild swings, so check out our top 5 trends in water for 2016 for it is better to be in a position to disrupt than be disrupted
  • Be Green and Prosper - With increased fines, penalties and jail sentences, China Water Risk’s McGregor & Liu expand on China’s push towards ‘all things green’. Also hear from top business leaders in China on why it pays to be green to prosper
  • Developing A Global Water Stewardship System - Alliance for Water Stewardship’s Zhenzhen Xu, Ma Xi & Michael Spencer introduce the first ever global water stewardship standard and share lessons learnt from Ecolab’s pilot at their Taicang China chemical plant

 Water, Power, Finance

  • Wind & Solar: Hidden Water Risks - China is looking at aggressive renewable expansion with wind & solar set to soar. But could this intensify toxic hidden water risks from rare earth mining? Also some solar technologies require more water than coal to generate power. We explore these hidden risks in our report “Towards A Water & Energy Secure China”.
  • China’s Pursuit of Energy Savings - Our report “Towards A Water & Energy Secure China” shows that billions of cubic metres of water can be saved via energy savings. See why China has no choice but to pursue this strategy.
  • Green Finance Revolution: China Can Lead - Can financing required to meet targets laid down in Paris be met? WRI’s Shouqing Zhu & Andrew Steer on how China can lead with five recommendations.

 

Hubert Thieriot

About Hubert Thieriot

Hubert’s focus at China Water Risk is the water-energy nexus. Realising China’s pivotal role in global resource management and climate change mitigation, Hubert moved to Beijing in 2012. During his two years in the capital, he conducted research for the International Institute for Sustainable Development as well as the Chinese Institute of Engineering Development Strategies (CIEDS) on international energy efficiency policies, low-carbon policies and China’s future trends including the circular economy. At the same time, Hubert also pursued a Master of Public Administration at Tsinghua University’s School of Public Policy & Management. Prior to Beijing, Hubert spent several years researching & lecturing on clean & renewable energy and industrial energy efficiency at institutions such as Mines ParisTech, the Swiss Federal Institute of Technology of Lausanne (EPFL) and Huazhong University of Science & Technology. Hubert has multiple publications on design optimization in industrial energy efficiency and hails from an engineering background with a MSc in Mechanical Engineering.

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