Coal as a share of China’s energy mix has retreated to a record-low 53 per cent in May, as renewable sources outpaced the growth in electricity demand.
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While the country’s electricity demand grew by 49 terawatt hours (TWh), or 7.2 per cent, compared to a year before, renewable power expanded by a record 78 TWh over the same period.
The new analysis published on Thursday was conducted by Lauri Myllyvirta, senior fellow at think tank Asia Society Policy Institute. His analysis reflected that solar generation, which accounted for over half of the clean energy generated in May, grew by an unprecedented 41 TWh, or 78 per cent. In addition, hydropower was found to have recovered from the record drought of 2022-2023 and increased by 34 TWh, or 39 per cent, while wind saw a modest rise of 4 TWh, or 5 per cent.
Myllyvirta said that figures published by China’s National Bureau of Statistic last month – which were widely-reported on – had excluded, among other data points, rooftop solar panels, leaving out about half of the electricity generated by solar.
The so-called “utilisation” data for wind and solar, which tracks actual power output relative to maximum potential, was also left out from the latest monthly update, despite being included in previous data releases.
The omission led media outlets to speculate that China’s record wind and solar installations in the past year might have underperformed in May due to grid constraints – a view that Myllyvirta’s analysis has debunked.
“First of all, the reports confused utilisation rates and curtailment rates [the extent to which electricity output is deliberately reduced below actual capacity to prevent a grid from becoming overloaded], which are reported separately. The stories claimed that the reason the National Energy Administration (NEA) didn’t publish the utilisation numbers was because of a spike in curtailment,” said Myllyvirta.
“However the curtailment numbers were published promptly, showing a small increase in curtailment but nowhere near large enough to notably affect overall utilisation, given normal month to month variability.”
Instead, his analysis of just-released May utilisation data from industry association China Electric Council (CEC) showed that year-on-year utilisation has jumped 3 percentage points for solar and 10 percentage points for hydro. Utilisation of wind power, however, fell in the past year, which Myllyvirta attributed to “month-to-month variations in wind conditions”.
Meanwhile, average utilisation of gas and coal power plummeted by 6.3 percentage points and 3.3 percentage points, respectively. This is despite China’s coal power spree of late, which saw an average of two new coal plants permitted each week in 2022 and 218 gigawatts (GW) of new coal capacity approved in the past two years.
Myllyvirta estimated that the latest decline in fossil fuel generation has led to a 3.6 per cent drop in carbon emissions from the power sector, which accounts for nearly half of China’s total greenhouse gas emissions and is the largest driver of its emissions growth in recent years.
The sector’s reversal in emissions suggests that the country’s emissions may have peaked last year, stated Myllyvirta.
“If current rapid wind and solar deployment continues, then China’s carbon dioxide output is likely to continue falling, making 2023 the peak year for the country’s emissions,” he said.
Flurry of positive climate report cards
Several reports published in the past week have suggested that China is on track to meet its climate targets.
On the same day Myllyvirta dropped his analysis, research by the United States-based non-governmental organisation Global Energy Monitor (GEM) showed that China is home to almost two-thirds of the world’s new wind and solar plants under construction.
While the country did not sign the COP28 pledge to triple renewable capacity by 2030, GEM said that the goal is “well within reach” even without more hydropower, based on China’s pace of clean energy deployment.
A separate study also released on Thursday by the Helsinki-based non-profit Centre for Research on Energy and Clean Air, which Myllyvirta co-founded in 2019, found that China stopped permitting new coal-based steel projects in the first half of 2024 – a first for the country since it announced its “dual carbon” goals in 2020 to peak emissions by 2030 and achieve carbon neutrality by 2060.
All 7.1 million tonnes per annum of permitted steelmaking capacity were lower-carbon electric arc furnace projects, “which could signify a turning point for the Chinese steel industry in terms of halting new investments in coal-based steelmaking,” wrote the report’s authors.
The steel industry is China’s second-largest greenhouse gas emitter after the power sector, due to its heavy reliance on coal.
Last week, Sydney-based think tank Climate Energy Finance also published a report stating that China is on track to meet its 2030 goal to install 1,200 GW of wind and solar by this month, six years ahead of schedule.
China’s power system reforms underway
Myllyvirta had previously written in a LinkedIn post that China’s power outages were not due to the variability of solar and wind – since they have proven to be more than capable of meeting the country’s growing energy demand – but due to grid inflexibility, which has held the country back from responding effectively to demand surges.
“The reason that there is a perceived need to build new coal power plants is that the way China’s grid is managed is so outdated that the existing capacity is not used effectively to respond to demand,” he said.
For instance, a province facing a power shortage might still be forced to export its electricity, instead of using the freed up transmission capacity to import power to meet this demand.
China has commenced some power system reforms to ease grid bottlenecks while reducing its reliance on coal. In May, Beijing set a new target to raise battery storage capacity to 40 GW by 2025, up from the previous target of 30 GW. Additionally, it aims to build over 200 pumped hydro storage plants with a combined capacity of 270 GW in the same period.
In March, Bloomberg reported that China’s largest utility has begun construction of a US$3.9 billion transmission and storage project – which involves an over 1,000 kilometre-long transmission line to carry wind and solar energy across three provinces and a pumped hydro storage site – to integrate the country’s growing amounts of renewable energy.
The government also recently relaxed limits to allow as much as 10 per cent of clean power to be curtailed, up from 5 per cent, allowing for more renewables to be deployed even in energy-rich areas where the grid would have been deemed congested.
“The thinking behind the change is that China is aiming to build a power grid by 2027 that is capable of handling higher penetrations of solar and wind. Relaxing the curtailment limit could be seen as a bridging measure,” said Myllyvirta.
“This change will increase the uncertainty for investors in wind and solar projects, but… in most cases, project economics are strong enough to shoulder this uncertainty and the change will, on net, support growth in capacity and generation.”
