RENEWABLE POWER

China leads the world in the deployment of renewable power, with more than twice as much capacity as any other nation. Almost 30% of the world’s renewable power capacity is in China. In 2017, almost half the renewable power capacity added globally was in China.[1]

More than a third of China’s power capacity is renewable. In 2017, roughly 19% of China’s power capacity was hydro, 9% was wind and 7% was solar.[2]

Figure 9-1. Renewable Power Capacity in China 2009–2018[3]

Policies

The Chinese government’s support for renewable power dates back to at least the 9th Five-Year Plan (1996–2000), which set targets for “new and renewable energy.” In 2005, the Renewable Energy Law set national renewable energy targets, provided financial support and required grid operators to connect to renewable electricity projects.[4]

The 13th Five-Year Plan on Renewable Energywas released by NDRC in December 2016. The Plan calls for:

  • increasing the share of nonfossil energy in primary energy consumption to 15% by 2020 and 20% by 2030,

  • increasing renewable power capacity to 680 GW by 2020,

  • promoting offshore wind development,

  • innovating in renewable energy technology,

  • reducing renewable power curtailment, and

  • scaling up distributed solar generation.[5]

The Plan has been implemented with generous feed-in tariffs, access to capital from government policy banks and other policies and measures.

The Chinese government is currently in the process of significantly changing its renewable power polices.  Feed-in tariffs—which have been central to the Chinese wind and solar industries for the past decade—are being phased out and replaced with:

  1. auctions in which wind and solar power developers who bid prices less than or equal to the prevailing coal tariff (“grid parity”) will receive contracts that guarantee purchase of all power from their projects at fixed prices for at least 20 years, and 
  2. “renewable electricity consumption quotas” requiring grid companies, large electricity users and others to purchase minimum amounts of renewable electricity set by the National Energy Administration.

These changes have been announced in a series of notices during 2018 and 2019.[6] The main reasons for the changes include the high cost of feed-in tariffs, challenges administering the program and falling costs for wind and solar power (which will make those technologies increasingly competitive in the years ahead).

Power sector reforms underway in China could help promote deployment of renewables. Historically, most coal plant operators in China received preferential access to the grid through contracts that guaranteed a minimum number of hours of dispatch per year. The power sector reforms underway scale back those guarantees.They also include incentives for interprovincial trading of electricity and pilot programs for dispatching electricity on the basis of the lowest marginal cost, both of which benefit renewables.[7]

The global consulting firm EY recently ranked China #1 on its Renewable Energy Country Attractiveness Index, a measure of policy support, availability of finance, grid infrastructure, long-term need for renewables and other factors.[8]

Discussions of the hydro, wind and solar power sectors are below.

References

 

[1] REN21, Renewables 2019 Global Status Reportat table R2; IRENA, Renewable Capacity Statistics 2019at p.2.

[2] REN21, Renewables 2019 Global Status Report; IRENA, Renewable Capacity Statistics 2019at pp.6, 14, 21; Xiaofeng Kang, “Hydropower Development in China: History and Narratives,”CGIAR Program on Water and Food; National Bureau of Statistics, “Statistical Bulletin 2018”(February 28, 2019) at part 3; China Energy Portal, “2018 Electricity & Other Energy Statistics”(January 25, 2019).

[3] IRENA, Renewable Capacity Statistics 2019 at pp. 6, 14, 21.

[4] State Planning Commission, “新能源和可再生能源发展纲要” [Outline to Develop New Energy and Renewable Energy](January 5, 1995); Lisa Williams, “China’s Climate Change Policies—Actor and Drivers,”Lowy Institute for International Policy (July 2014) at p.2; Feng Wang, Haitao Yinand Shoude Li,“China’s Renewable Energy Policy: Commitments and Challenges,”Energy Policy(2010). A “feed-in-tariff” guarantees electricity generators a set price for delivery of power, typically at levels high enough to encourage investment.

[5] NDRC, “13th Five-Year Plan for Renewable Energy.”

[6] NDRC and NEA, “Notice on the first batch of 2019 of non-subsidized wind and PV power generation projects (grid-parity projects)”(May 20, 2019); NDRC and NEA, “Notice on the establishment and improvement of a safeguard mechanism for renewable electricity consumption”(May 10, 2019); NDRC and NEA, “Notice on the establishment and improvement of a safeguard mechanism for renewable electricity consumption (‘Renewable electricity quota’)”(January 7, 2019); NDRC, Ministry of Finance and NEA, “Notice on matters relevant to PV power generation in 2018”(May 31, 2018). 

[7] See GIZ, China National Renewable Energy Center and Danish Energy Agency, China Energy Policy Newsletter(May and June 2019) (as well as other recent newsletters in this series).

[8] Renewable Energy Country Attractiveness Indexey.com (accessed August 22, 2019).

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