China Blows Past 2030 Target For Solar, Wind

Back in 2020, Chinese President Xi Jining had outlined a plan to be carbon neutral by 2060, achieve peak emissions by 2030, and in doing so, add 1200 GW of solar and wind capacity by 2030.

Low Prices Drive Faster Adoption

As it turns out, the Chinese might have surprised even themselves considering how quickly they have actually achieved the solar and wind targets. Based on multiple estimates, the country crossed 1200 GW of total capacity for solar and wind in July this year, and could yet end the year closer to 1400 GW of solar and wind capacity. Solar capacity additions this year are expected to be around 200-210 GW, on the back of record low prices. China’s electricity demand continued to grow in 2023, increasing by 6.9%. Wind and solar met 46% of this demand increase, but coal met the remainder. As a result, China’s power sector emissions rose by 5.9% compared to 2022 – six times the global increase of 1%. However, this increase would have been greater if not for the record additions of wind and solar. China is now approaching a tipping point where clean additions outpace demand growth, with the IEA forecasting a 3% fall in coal generation in 2024. From 2027, expect nuclear to also start making a larger impact as construction picks pace for plants started in 2020 and earlier.

Transmission, Storage Infra To Support Expansion

State Grid, the government-owned operator that runs the majority of the country’s electricity transmission network, has a target to raise inter-provincial power transmission capacity to 300GW by 2025 and 370GW by 2030, from 230GW in 2021. Not only

Not just that, investments in Pumped Hydro Storage (PHS), combined with renewable energy are also moving at a furious pace to ensure grid stability. Finally, large grid connected battery construction that is much faster than PHS is also under way, to reduce the risk of curtailments during periods of low demand.

Add to that predictions that the country’s emissions might have peaked in 2023 as well, and you have a country making a very strong case for ‘responsible’ behaviour, even as some of the largest markets for its goods seem to be preparing to erect tariff walls against its exports.

Lessons for India

For India, the Chinese experience is instructive, as it has been done on the back of a dominant manufacturing base in solar, wind and EVs, the other area where China has surpassed all expectations of growth and projections.  It has not always been a smooth ride, with many firms falling by the wayside, unable to survive the intense local competition and simply unable to find foreign markets with the ability or the capacity to absorb their products. As we see now in the case of solar equipment, where a consolidation wave is picking up pace in China.

Making Renewables Plus Nuclear The Lynchpin Of Future Energy

Skeptics point to Chinese plans to add more thermal plants to cast doubts on these numbers, but it’s worth remembering that unlike India which had to dust off shelved thermal plans for revival in the face of rising electricity demand, China is much more likely to let those plans lie, rather than act on it. The burst of investment it has earmarked for nuclear, where it has a much better record of establishing power plants on time in recent years, indicates every possibility that renewables and nuclear will take up a large part of the incremental demand and keep cutting coal out from baseload demand as it exists.

From 2019 to 2023, the number of new reactors approved in China was six, four, five, 10 and 10 respectively. Last week, 2024, a further 11 plants were approved for construction. According to World Nuclear Association figures, China currently has 56 operable reactors with a total capacity of 54.3 GW. A further 30 reactors, with a total capacity of 32.5 GW, are under construction.

In going for the combination of more nuclear and faster renewables additions, China is again going against conventional wisdom in the west for instance, where gas has been favoured over nuclear power in recent years for baseload needs. But the investments in storage indicate a clear plan to make it happen in China.

Conclusion

Fossil fuels accounted for 65% of China’s power needs in 2023, but on a much larger demand base that is over 10X of India. That means, the 35% power coming from clean energy, including 13% from Hydro, and 16% from wind and solar in China, will move up much faster as 2024 numbers come out next year. The target of 25% from these in 2025 does not look improbable at all.

The share of Wind and solar at16%, is well above the global average (13%). In fact, according to Ember, China generated 37% of global solar and wind power in 2023. That figure will cross 40% in 2024 without a doubt.