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International News From the Field: China

There has been much discussion and news about China’s power situation, a perfect storm resulting in rationing and a multi-month energy crisis. In this week’s article, we are bringing you some insight and data regarding the electric power crunch ...
Dec 17, 2021

There has been much discussion and news about China’s power situation, a perfect storm resulting in rationing and a multi-month energy crisis. In this week’s article, we are bringing you some insight and data regarding the electric power crunch, improvements and opportunities, and the outlook for the photovoltaic industry for the next few years. For details, read on. 

Electric power crunch, improvements, and opportunities 

Industry makes up 59% of total grid demand in China. However, because of the post-pandemic resurgence in demand for Chinese goods in the first eight months of 2021, energy demand and consumption hit record highs. Exacerbating the strained energy situation was widespread flooding across key coal-producing provinces, which sent coal prices skyrocketing almost 300%. There is a maximum quota for annual thermal power production (read: coal) and consumption for the different regions of China, and as they approached the limits, emergency power rationing and price controls were implemented. Lastly, some conflicting energy policies and major market distortions all combined with the above to create an energy shortage. 

China’s Dual-Carbon Strategy aims to reach the country’s carbon emissions peak by 2030 and to be carbon neutral by 2060. Presently, 70% of China’s energy production is thermal power, mostly coal. Because traditional thermal energy-intensive approaches can no longer sustain the high-quality development of the world's second-largest economy, policymakers are finding a new growth engine – alternate sources for a stable power supply.

Below is data for the electric power generation industry of the first nine months of 2021, according to the CEC (China Electricity Council). Thermal power has the lion’s share. 

  • Total amount of power generation: 60,721 GWh; YOY increase 10.7%

  • Thermal power: 43,273 GWh; YOY 11.9%; 71.3%

  • Hydro power: 9,030 GWh; YOY -0.9%; 14.8%

  • Wind power: 4,715 GWh; YOY 41.6%; 7.8%

  • Nuclear power: 3,031 GWh; YOY 12.3%; 5.0%

  • Solar power: 672 GWh; YOY 8.9%; 1.1%

For newly installed capacity, thermal has the least increased share. The new focus is on clean energy.

  • New installed capacity: 92.40 GW; YOY 21.82%

  • Thermal power: 32.46 GW; YOY 1.9%

  • Hydro power: 14.36 GW; YOY 42.4%

  • Wind power: 16.43 GW; YOY 20.5%

  • Nuclear power: 3.40 GW; YOY 67.1%

  • Solar power: 25.56 GW; YOY 30.7%

This focus can also be seen in the investment data.

  • Total power investment: $48.28 billion, YOY 1.8%

  • Thermal power: $5.71 billion, YOY 12.3%

  • Hydro power: $10.78 billion, YOY 5.3%

  • Wind power: $22.46 billion, YOY minus 12.6%

  • Nuclear power: $5.48 billion, YOY 51.6%

  • Solar power: $4.51 billion, YOY 27.3%

Investments in clean energies, such as hydropower, nuclear power, and wind power, accounted for 90.6% of total investment. Over the next decade, the goal is to increase the volume of nuclear power generation from 5% to 7% of total power generation. Based on current capacity of approximately 75GW, the total installed capacity should reach 200 GW in 2030. There may be more opportunities from this manufacturing segment.

Furthermore, it is important to note that the Beijing-based Green Finance Committee of the China Society for Finance and Banking issued new research results on achieving green development. It showed that China's cumulative demand for green and low-carbon investments in the next three decades (2021-2050) will reach 487 trillion yuan ($76 trillion), which is an annual average investment of $2.5 trillion. Wow!

Outlook for the Chinese Photovoltaic Industry for 2022-2025 

China’s Dual-Carbon Strategy brings huge opportunities to the entire industrial ecosystem. The photovoltaic industry is one of the main areas of focus. It is estimated that a CAGR of 20%-30% of photovoltaic installed capacity will be seen during the current, 14th Five-Year Plan period from 2021 to 2025. Today, the Chinese photovoltaic supply chain of silicon, silicon wafers, cells, and modules all account for more than 70% of the global supply. The auxiliary materials of glass, film, and BOS inverters are also involved. China’s photovoltaic industry’s supply chain is expected to fully benefit from the growth of domestic and global demands. China surely plans to lead the future growth of the photovoltaic industry’s output value, as well as technological progress.

It is estimated that 2022 will a big year for photovoltaic installed capacity, and the industry's prosperity will continue to rise. This translates into nice opportunities for manufacturing technology sales.

For more information, please contact Fred Qian at fredqian@AMTchina.org

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Author
Fred Qian
General Manager - Shanghai Technology and Service Center of AMT
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