Analysis & Reviews

Wind & Solar - Hidden Water Risks

Wind & Solar: Hidden Water Risks

China Water Risk Towards A Water & Energy Secure China

15 April, 2015 – China Water Risk published report titled TOWARDS A WATER & ENERGY SECURE CHINA – Tough choices ahead in power expansion with limited water” Resources.

The report explores strategies towards water and energy security in China as well as to provide an overview of water risk exposure across China’s power landscape.

Below is a teaser on the “Other Renewables” chapter from the report.

Click here for the full report. Click here for the overview.

 


China Water Risk Other RenewablesConcern over climate change and negative impacts from burning fossil fuels have driven the development of renewable energy globally. China, the largest greenhouse gas (GHG) emitter, has become a global leader in renewable energy. The message from the central government is loud and clear; “In China, we will put great weight behind the development of wind power, photovoltaic power, and biomass energy….” said Premier Li Keqiang during the 3rd session of the 12th National People’s Congress on 5 March, 2015.

However, it is clear from the analysis in our reportTOWARDS A WATER & ENERGY SECURE CHINA – Tough choices ahead in power expansion with limited water”  (referred to as “the report”), that for water not only does the choice of renewable energy matter, the type of technology adopted in electricity generation also matters. These water risks need to be considered before any aggressive non-hydro renewable expansion.

Amongst renewables, wind and solar are the least reliant on water

Water consumption in power generation varies across different types of renewables. As shown in the chart below, both solar PV and wind require little water in power generation; while, concentrated solar power (CSP), biomass and geothermal consume larger amounts of water depending on the technologies adopted as well as cooling types.

… solar PV and wind require little water in power generation … Therefore, from a water perspective China is mainly pushing for solar and wind

Water Consumption in Power Generation for Different Renewables

Therefore, given water constrains China is primarily pushing solar and wind installed capacity expansion.

Wind and solar power lead China’s renewable drive

China surpassed 12FYP target of 121GW in 2014 By 2020 govt wants 300GW of wind & solar

China’s development of wind and solar has been accelerating in recent years and by 2014 it reached 124GW surpassing the 12FYP (2011-2015) target of 121GW. Accordingly, the original 12FYP target (to be met by the end of 2015) was increased to to 135GW, primarily by almost doubling the target for solar power.

By 2020, the central government wants wind and solar to grow to 300GW. As shown in the report our CWR Base Case scenario expects total installed capacity of wind and solar to be at 900GW by 2050. This means an expected add of +776GW between 2014 and 2050 (see chart below).

CWR Base Case scenario expects total installed capacity of wind & solar to be at 900GW by 2050, a +776GW add

2005-2050F China's Actual & Forecasted Wind and Solar Energy

All scenarios of wind and solar expansion are aggressive

CWR analysis shows wind & solar could replace nuclear & coal-fired power

Other Chinese government research affiliates have released even more aggressive forecasts; under the most aggressive scenario, wind and solar could expand to 2TW each by 2050.

However, no matter how aggressive the forecasts are, as per our analysis in the report, we believe that:
Solar

  • Under the current government plans and policies, solar energy bases are to be established in the West of China and there are plans afoot to shift China’s solarscape towards a distributed future with distributed solar PV and solar heating projects across the country;
  • Distributed solar PV could complement hydropower and depending on the size of the expansion could replace inland nuclear expansion (see how much solar is needed to replace nuclear power here); and

Wind

  • China is looking to expand its wind farms in the North and provincial analysis show significant overlap with coal bases
  • Depending on the aggressiveness of the expansion, big wind can substitute coal-fired power in the North.

It is worth noting from the chart that the 2030-2050F growth in wind and solar is exponential compared to that between 2014 and 2030. This could be due to current grid infrastructure limitations.

That said, before we embark on this aggressive expansion, hidden water risks should be taken into account in both solar and wind.

Solar: tech choice matters as water consumption varies between different types

Solar PV requires little water in power generation. However, to maximize the energy efficiency of a solar PV module, regular cleaning of the panels is often suggested to remove dust and other particles on the surface that could reduce efficiency by up to 50%. Water washing is the most common way. However, according to Macknick et al. (2011), the amount of water used for such maintenance is considered minimal; moreover, many operators do not wash their PV panels in practice. Meanwhile, some operators have come up with water-free ways to clean the PV panels – these are detailed in the report.

CSP technologies require cooling, accordingly water consumption increases

However, Concentrated Solar Power (CSP) is different. Like thermal power generation, most of CSP technologies require cooling and analysis detailed in the report shows that it can use more water than coal. Therefore, when developing CSP plants one should keep water risks as well as other environmental impacts in mind.

Wind’s dirty secret of wind turbines: rare earth mining & production threaten key watersheds

2012 Global Rare Earth ProductionThe production of permanent magnets, required by wind turbines to operate uses neodymium, a Light Rare Earth Element (LREE) and dysprosium, a Heavy Rare Earth Element (HREE).

Based on our analysis in the report, adding 100GW of wind power from 2015 to 2020 requires around 17,050-18,150 tonnes of neodymium and 2,950 tonnes of dysprosium will be needed.

Currently, rare earths are primarily supplied by China. In 2012, China accounted for 87% of global production (see pie chart) and held around 23% of total global rare earth ore (REO) reserves.

Large mines containing LREEs in the North lie next to the Yellow River while smaller mines containing HREEs are located in Jiangxi near the source of the Dongjiang River which feeds important cities including Guangzhou, Shenzhen and Hong Kong. The report warns that China’s key watersheds are exposed to serious contamination risk if lax REO mining and REE production practices are not tightened.

The report warns: “China’s key watersheds are exposed to serious contamination risk if lax REO mining and REE production practices are not tightened.”

China needs to mitigate pollution from REO mining and REE production before exponentially growing wind and solar between 2030 and 2050. A white paper issued by State Council in 2012 stated, “China will never develop the rare earth industry at the expense of its environment”.

It remains to be seen whether the newly amended Environmental Protection Law, in force since 2015 can help achieve this. Strong law enforcement, education and more stringent water resources management are musts to protect China’s watersheds.

Aside from rare earths, the manufacture of wind turbines also requires significant amounts of steel which is power intensive to manufacture. Moreover, coking coal is a raw material input in its manufacture.  We show in the report that achieving 2TW of wind capacity by 2050 whilst positive for coal bases in the North will also increase demand in steel by 241 million tonnes or 30% of total crude steel output in 2014, which means more energy.

Serious action needed to address hidden water risks from renewable expansion in China and globally

There is no doubt that China will continue to push for aggressive expansion of wind and solar to meet its still growing electricity demand. Thus it is critical for policy makers and related industries to beware of the discussed hidden water risks and find ways to avoid or mitigate them.

There is no doubt that China & the world will push for wind & solar expansion …

…China & its REE trading partners should work together to mitigate mining impacts on China’s watersheds

However, this is not just China’s problem. China’s dominance in REO mining and REE production means that much of this is exported. Japan and the US are China’s largest REE trading partners. Also China’s key position in the global manufacture of renewables means that “made in China” products and will continue to supply the global movement towards a renewable future.

China needs to tackle these hidden water risks. The rare earths industry needs to reinvent itself. China’s REE trading partners should also bear some responsibility and work with China to find ways to minimize the negative impacts on China’s watersheds.

As the world steps up its renewable and adopts massive energy savings, so will the demand for REO, REE, steel, copper and aluminum rise. Therefore, aside from rare earths, the extraction and production of these important commodities (where China is a key global producer) are all worth a revisit.

It is imperative that China, the renewables industry as well as the energy savings industry start focusing on this today. Serious actions need to be taken to address these hidden risks.


Further Reading

  • Towards Water & Energy Security – China Water Risk published report titled “Towards A Water & Energy Secure China”. Tough choices lie ahead in power expansion with limited water. Find out what strategies are employed and get a comprehensive overview of water risk exposure across China’s power landscape
  • China: Not Ready To Move Away From Coal - Professor Xie Kechang, Vice President of the Chinese Academy of Engineering, on the future role of coal, strategies to ensure energy security & challenges ahead for coal-to-chemicals
  • 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
  • Balancing Water For Agri & Coal - China’s coal mines lie next to its farmlands and it plans to save water used in agriculture to fuel coal growth. In “Towards a Water & Energy Secure China”, China Water Risk explores strategies to control water use between agriculture & coal to ensure both food & energy security
  • China Nuclear: The Future is Unclear - Will China’s nuclear ambitions be thwarted by water risks and contamination fears? China Water Risk explores inland nuclear expansion and alternative scenarios for densely populated regions in our report “Towards a Water & Energy Secure China”

To access the detailed non-hydro renewables analysis and that for other power types in the report click here.

China Water Risk Water Risk Exposure Across China Power Landscape 550
China Water Risk

About China Water Risk

We believe regardless of whether we care for the environment that water risks affect us all – as investors, businesses and individuals. Water risks are fundamental to future decision making and growth patterns in global economies. Water scarcity has emerged as a critical sustainability issue for China's economy and since water powers the economy, we aim to highlight these risks inherent in each sector. In addition, we write about current trends in the global water industry, analyze changes occurring both regionally and globally, as well as providing explanations on the new technologies that are revolutionizing this industry.

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