Encyclopedia
Please note this is a comparison between Version 1 by Muhammad Shahid Mastoi and Version 2 by Nora Tang.
Renewable energy is now the world’s most reliable and sustainable solution to environmental pollution, the energy crisis, and social sustainability. In order to regulate renewable energies and ensure the sustainable development of renewable energy in China, a regulatory framework is imperative. In 2020, China’s electricity generation and consumption increased by 0.9 and 1.3 percent annually, respectively, producing capacity of power plants increased by 5.6 GW, coal consumption of power supply decreased by 4.3 g/kWh, power generation projects investment increased by 51.6 billion RMB, power grid projects investment decreased by 1.8 billion RMB, and newly installed generation capacity increased by 769 GW year on year (YOY). During the first three quarters of 2021, the generation, consumption and coal consumption of electricity increased respectively by 10.7 and 12.9%, the generating capacity of power plants increased by 9.4 GW, the average coal consumption of power supply decreased by 0.9 g/kWh, power generation projects investment increased by 1.8 billion RMB, while power grid projects investment decreased by 0.3 billion RMB and new generation capacity added around 20.16 GW compared to the same period last year. Furthermore, domestic power consumption grew by 6.0% and 7%, respectively, in 2020–2021.
- China power sector
- electricity generation
- electricity consumption
- electricity demand and supply
- renewable energy
1. Overview of the Renewable Energy Sector
China’s economic development is heavily reliant on energy production. There are serious environmental and energy security concerns associated with coal and oil consumption. Chinese authorities have increasingly pushed for optimizing their energy structures in recent years. Due to the rapid development of the renewable energy industry, long-term goals and policies have been implemented. China has become the world’s largest market for renewable energy, which has reduced its dependence on coal [1][2][3][4][26,27,28,55].
Chinese renewable energy development has made ground-breaking progress in the last few years. In 2005, the Renewable Energy Law was introduced; it was amended in 2009. Several supporting policies have been issued to support the establishment of standardization committees for hydropower, wind power, and photovoltaics (PV). Hydropower is a leading source of renewable energy in China, and it plays a key role in the country’s energy supply. In order to support the industry’s growth, several support activities have been enhanced, including certification, construction, and exploration. In January 2021, the National Energy Administration (NEA) of China released its draft Energy Law for public comment (Draft Energy Law), and this stipulates that renewable energy will be prioritized [5][29].
China is experiencing a boom in renewable energy production. Through solar and wind energy, the country strives to increase its share of total energy production. Hydropower, wind power, and solar energy are three of China’s most prevalent renewable energy sources. China is one of the world’s top wind and solar energy producers. The solar energy industry in China has grown to become the world’s largest market for solar energy since 2013. A recent article published by the International Energy Agency [6][39] predicts China will contribute 40% of the world’s wind energy growth and 36% of its solar energy growth in the next five years.
Currently, China is converting from fossil fuels to renewable energy sources and promoting sustainable energy. China’s 14th Five-Year Plan, which outlines economic and regional development goals in 2020–2025, has included developing a clean, low-carbon, safe, and efficient energy system by 2050 as part of its energy revolution [7][31]. Foreign investments in the renewable energy sector are encouraged by the Chinese government. An updated Industry Catalog for Encouraged Foreign Investment (“Catalogue”) has been released for public comment by the National Development and Reform Commission and the Ministry of Commerce. The Catalogue identifies renewable energy as one of the sectors attracting foreign investment by allowing foreign companies to establish wholly owned enterprises to develop this industry in China [8][56].
2. Recent Development in the Renewable Energy Sector
In China, investments in renewable energy decreased by 8% in 2020 due to a combination of policy changes and market shifts. In addition to the slow economy in many sectors in 2021, the pandemic has undoubtedly impacted the renewable energy sector. Electricity demand has decreased because of COVID-19 [9][49]. In particular, wind capacity has been affected by a decrease of 30.47 percent. However, Chinese policies implemented in 2020 show that the government is committed to developing renewable energy [10][34]. In the Draft Energy Law, one of the most significant measures focuses on renewable energy policies that will boost the development of this industry [11][41]. Energy law drafts elevate renewable energy development to a strategic position, thereby clarifying that its development should be prioritized.
On the other hand, fossil energy development must be handled responsibly. A new strategic and structural development level has been set for renewable energy resources [12][42]. In addition, the Draft Energy Law contains a system of mandatory requirements to consume renewable energy, a significant change that extends the consumption requirement from grid companies to a broader range of firms, including those that sell and supply energy.
According to China’s National Energy Administration, 25.74 million kilowatts of new wind energy capacity were added to the country’s grid in 2019, and the curtailment rate fell by 3 percentage points [13][43]. The national average abandonment rate for photovoltaic power generation decreased from 2.2% to 2.1%, increasing by 30.11 million kW. A total of 210 million kilowatts and 204 million kilowatts of grid-connected capacity were generated by wind and photovoltaic power, respectively, by the end of 2019 [14][44].
Despite several setbacks, wind energy and photovoltaic power have continued to develop in China steadily and efficiently in 2019. However, the annual growth rate of wind power generation is significantly higher than that of photovoltaic power generation. Photovoltaic and wind power technologies have progressed rapidly and the phenomenon of power abandonment has been effectively managed [15][45]. Electric storage systems, including renewable energy, have a leading position in the Chinese market. As a result of cost-competitive technologies, solar and wind energy costs have fallen dramatically in recent years. Therefore, wind and solar power no longer receive subsidies, and nationwide subsidies are also being phased out. The government is expanding its capability to develop renewable technologies as part of China’s strategy to develop renewable energy [16][17][18][21,52,53]. By promoting distributed energy, smart grids, energy storage technology, and flexible consumption options, the National Development and Reform Commission hopes to reduce costs and increase the reliability of clean energy. They advise promoting distributed energy, smart grids, energy storage technology, and flexible consumption options to promote green energy [8][56].
The focus is on increasing renewable energy consumption rather than expanding production capacity. In China, the government aims to coordinate renewable obligations and green certificates along with the participation of renewables in spot markets and ancillary services markets [19][20][21][22][23][22,23,32,37,57]. Government subsidies have been provided to the renewable energy sector in China since 2011. However, the government has become stricter in restricting how these subsidies are used over the past few years. New solar PV plants can expect fewer subsidies from the NEA in 2020, as the number of subsidies has been reduced from CNY 2.6 billion to CNY 1.5 billion [5][29].
3. Renewable Energy Development in the Year 2020
By 2020, the global renewable energy industry will have grown by more than 280 GW due to key market policy deadlines, the highest annual growth rate for the past 20 years. Supply chains continued to be challenged by the pandemic and construction delays, but renewable capacity additions in 2020 increased by over 45% from 2019 and broke yet another record. The expansion of wind power capacity worldwide rose by 90%. Furthermore, the growth in new solar PV installations of 23% to nearly 135 GW in 2020 contributed to this record growth. There was a large increase in renewable energy capacity in 2020 due to objectives implemented by the United States, China, and Vietnam. China accounted for 80% of the annual solar and wind installations increase, including offshore wind and solar PV projects contracted under China’s former feed-in tariff scheme (FIT). Those awarded in previous central and provincial competitive auctions had to be connected to the grid by 2020. Wind energy developers in the United States rushed to finalize their projects before the production tax credit (PTC) expired, even though it was extended by one year until December 2020. A record number of commercial and residential solar PV projects were installed in Vietnam during the phaseout of the feed-in tariffs (FITs) [24][25][35,58].
4. Renewable Energy Development for 2021 and 2022
The deployment of renewable energy accelerated in 2020, resulting in a “new normal” for renewable additions in 2021 and 2022. With 280 GW of new renewable energy capacity expected to be operational in 2022 and 270 GW in 2021, the pace of renewable energy addition is likely to continue at an exceptional level.
In 2022, annual wind capacity additions will decline after China’s extraordinary increase in 2021. Despite this, 80 GW of installations will be completed worldwide in 2022, increasing 35% over 2019. Solar PV capacity additions have continued to grow due to low investment costs and government support, lessening the effect of the slower growth of wind power additions. It is expected that solar PV expansion will reach 145 GW and 162 GW at the end of this year and next year, breaking record numbers and accounting for almost 55% of renewable energy expansion. By 2022, the rapid growth of hydropower in China will be driven by the commissioning of large hydropower projects. Other renewable energy, led by bioenergy, has had a steady growth rate, averaging 3% of all additions to renewable energy generation [26][60].
5. Renewable Energy Policy Transition in China
China has consistently contributed 40% to global renewable capacity growth for several years, but in 2020, it was responsible for 50% for the first time. This was made possible by a peak in new installations in December. Projections for renewable capacity additions in China in 2022 are expected to decline by one quarter following the government’s phasing out of subsidies for wind and solar PV projects at the end of 2020. Additionally, there are uncertainties surrounding the new incentive schemes set to be announced by the end of 2022. Although China still projects that its annual additions of renewable energy capacity will increase by 45% in 2021 and 58% by 2022, these numbers are substantially higher than the average additions from 2017–2019. The country’s growth is expected to accelerate again only after 2022, boosted by new policies aligned with its ambitious long-term goal of achieving net-zero emissions by 2060 [27][61].
6. Future Developments and Opportunities in the Renewables Sector
In China, energy transformation is taking place. Among China’s challenges, including energy security, climate change, and severe air and water pollution, renewable energy plays a crucial role [28][22][29][30][31][32][33][34][35][30,37,62,63,64,65,66,67,68]. According to the 14th Five Year Plan of China, which sets out the blueprint for the country’s economy and development goals for 2021–2025, renewable energy and innovative projects, such as renewable consumption within certain emerging industries, receive the most attention. Renewable energy technologies are becoming more competitive in cost as the subsidies in the sector are gradually phased out, along with the revision of the emission trading scheme (ETS) to achieve grid parity for renewable energy.
By the end of the 14th Five-Year Plan, wind and solar energy should have reached grid parity. By 2060, wind and solar power will be carbon neutral. There is no doubt that China will become carbon neutral and it is not clear yet how it will do so, but renewable energy will play a major role. In light of the reduced curtailments, renewable energy usage is expected to increase. Technical innovations will play a crucial role in renewable energy, battery storage, and green hydrogen. During the 75th anniversary General Assembly of the United Nations, a China official announced that China would reach peak emissions [36][69].
