Power Insights from China For 2020-Surge for Wind, Solar, Consumption Up 3.1%

On January 19, China’s National Energy Administration (NEA) released data on electricity consumption for the full year (2020). And the numbers are surprising, in more ways than one.

The big surprise of 2020 was the newly installed capacity of power sources. At 190.87 million kilowatts, these included 13.23 million kilowatts of hydropower, 71.67 million kilowatts of wind power, and 48.2 million kilowatts of solar power. The 71.67 GW of Wind, to put it in perspective, is higher than the GLOBAL projected additions that were made by the Global Wind Energy Council in November 2020. Similarly, on Solar power too, China has comfortably gone past the estimates of 36-45 GW, by adding an impressive 48.2 GW. Coming from the NEA, these numbers should be credible, and point to the challenges of getting China numbers for outside firms, including global bodies like the GWEC. For instance, till November, it was widely assumed that wind capacity additions were less than 25 GW. The final numbers have clearly been massaged by the rush to complete, or ‘qualify’ wind projects, as subsidies stop from January 2021. This pre-dating also causes a gap between claimed numbers and grid connected capacity, which was as high as 26.3 GW at the end of 2019, for instance. Take away that number, and you have a far more acceptable 46 GW number for fresh Wind additions, for instance.

The total electricity consumption of the country was up to 7511 billion kWh, a year-on-year increase of 3.1%. In terms of industries, the power consumption of primary industries was 85.9 billion kWh, a year-on-year increase of 10.2%; the power consumption of the secondary industries was 5121.5 billion kWh, a year-on-year increase of 2.5%; the power consumption of the tertiary industry was 1208.7 billion kWh, a year-on-year increase of 1.9 %; The electricity consumption of urban and rural residents was 1,094.9 billion kWh, a year-on-year increase of 6.9%.

In 2020, the cumulative average utilization hours of power generation equipment in power plants of 6000 kilowatts and above across the country was 3758 hours, a decrease of 70 hours year-on-year. Among them, the average utilization hours of hydropower equipment was 3827 hours, an increase of 130 hours year-on-year while the average utilization hours of thermal power equipment were 4216 hours, a decrease of 92 hours year-on-year.

The impact of the higher investments in both wind and Solar are perhaps beginning to show on utilisation of thermal, though it might be too early to call a long term trend here.

What is clear is that the massive capacity expansions and upgrades made by domestic solar firms, and now Wind energy firms, were done on the back of a confidence in a very large domestic market. With global solar additions in 2021 already projected to be in the range of 150 GW to 195 GW, China looks set to deliver over a third of these numbers in 2021. The extra capacity and upgrades in module sizes will also make it more challenging for both existing and potential competitors to match up to the Chinese on price or efficiency. Something manufacturers in India will keep an eye on, and need more protection from finally.

The new focus on Wind Energy also follows the script, following a drop in prices since 2018. Wind energy is finally reaching prices acceptable to the  Chinese to supply to their high consumption centres along the coast, which means a new thrust on offshore wind. Something we highlighted earlier last week.