Electricity sector in China

Coal-fired power plant in China

Entrance to a small coal mine in China, 1999.

A coal shipment underway in China, 2007.

China is the largest producer and consumer of coal in the world and is the largest user of coal-derived electricity. However, coal has been falling as a percentage of the energy mix, from over 80% in 2007 to 64% in 2018. Coal electricity generation has also declined in absolute terms since 2014.

Domestic coal production has declined even further, dropping 9% year on year in 2016.[32] Further declines in production were announced in July 2016 when the commission in charge of state-owned enterprises, SASAC, ordered companies under its supervision to cut coal mining capacity by 10% in 2 years and by 15% in 5 years.[33]

Despite the cuts to coal production and falling percentage of coal in the energy mix, electricity consumption is expected to grow by 3.6-4 percent over 2016 to 2020 according to the Thirteenth Plan (2016–2020).[34] According to the same five-year plan, coal power capacity will be expanded from 960 GW to under 1,100 GW by the end of 2020 to meet some of the continued growth in electricity demand.[34] In the first two months of 2016, China added 22 GW of capacity, 14 GW of which was coal, according to the China Electricity Council.[35]

To curtail the continued rapid construction of coal fired power plants, strong action was taken in April 2016 by the National Energy Administration (NEA), which issued a directive curbing construction in many parts of the country.[35] This was followed up in January 2017 when the NEA canceled a further 103 coal power plants, eliminating 120 GW of future coal-fired capacity, despite the resistance of local authorities mindful of the need to create jobs.[36] The decreasing rate of construction is due to the realization that too many power plants had been built and some existing plants were being used far below capacity.[37]

In 2019, reports show that approvals for new coal mines had increased fivefold over approvals in 2018, and the China State Grid Corporation forecast that total coal power plant capacity would peak at 1,230-1,350 GW, an increase of about 200-300 GW.[38] The think tank Carbon Tracker estimated the average loss was about US$4/MWh and that about 60% of power stations were cashflow negative in 2018 and 2019.[39] In 2020 Carbon Tracker estimated that 43% of coal-fired plants were already more expensive than new renewables and that 94% would be by 2025.[40] According to a 2020 analysis by Energy Foundation China, in order to keep warming to 1.5 degrees C coal plants without carbon capture must be phased out by 2045.[41]

Liujiaxia Dam in Gansu

The Three Gorges Dam is the largest power station (of any kind) in the world by installed capacity, with 22.5 GW.

Hydroelectricity is currently China's largest renewable energy source and the second overall after coal.[42] China's installed hydro capacity in 2015 was 319 GW,[43] up from 172 GW in 2009, including 23 GW of pumped storage hydroelectricity capacity.[43] In 2015, hydropower generated 1,126 TWh of power, accounting for roughly 20% of China's total electricity generation.[43]

Due to China's insufficient reserves of fossil fuels and the government's preference for energy independence, hydropower plays a big part in the energy policy of the country. China's potential hydropower capacity is estimated at up to 600 GW, but currently the technically exploitable and economically feasible capacity is around 500 GW. There is therefore considerable potential for further hydro development.[42] The country has set a 350 GW capacity target for 2020.[42]

Hydroelectric plants in China have a relatively low productivity, with an average capacity factor of 31%, a possible consequence of rushed construction[42] and the seasonal variability of rainfall. Moreover, a significant amount of energy is lost due to the need for long transmission lines to connect the remote plants to where demand is most concentrated.[42]

Although hydroelectricity represents the largest renewable and low greenhouse gas emissions energy source in the country, the social and environmental impact of dam construction in China has been large, with millions of people forced to relocate and large scale damage to the environment.[44]

Wind farm in Xinjiang, China

Wind farm in Xinjiang, China

With its large land mass and long coastline, China has exceptional wind resources:[45] it is estimated China has about 2,380 GW of exploitable capacity on land and 200 GW on the sea.[46] At the end of 2014, there was 114 GW of electricity generating capacity installed in China, more than the total nameplate capacity of China's nuclear power stations,[47] (although capacity of wind power is not on par with capacity of nuclear power) and over the year 115,000 gigawatt-hours (GWh) of wind electricity had been provided to the grid.[48] In 2011, China's plan was to have 100 GW of wind power capacity by the end of 2015, with an annual wind generation of 190 terawatt-hours (TWh).[49]

China has identified wind power as a key growth component of the country's economy;[50] researchers from Harvard and Tsinghua University have found that China could meet all of their electricity demands from wind power through 2030.[51]

In terms of nuclear power generation, China will advance from the moderate development strategy to accelerating development strategy. Nuclear power will play an even more important role in China's future power development. Especially in the developed coastal areas with heavy power load, nuclear power will become the backbone of the power structure there. China has planned to build up another 30 sets of nuclear power generator within 15 years with total installed capacity of 80 GW by 2020, accounting for about 4% of China's total installed capacity of the electric power industry. This percentage is expected to double every 10 years for several decades out. Plans are for 200 GW installed by 2030 which will include a large shift to Fast Breeder reactor and 1500 GW by the end of this century.

China is the world's largest market for both photovoltaics and solar thermal energy. Since 2013 China has been the world's leading installer of solar photovoltaics. Solar PV in China is a growing industry with over 400 companies. In 2015, China became the world's largest producer of photovoltaic power, narrowly surpassing Germany.[52][53][54] By the end of 2016, total PV capacity had increased to over 77.4 GW,[55] and in 2017 China was the first country to pass 100 GW of cumulative installed PV capacity.[56] The contribution to the total electric energy production remains modest[57] as the average capacity factor of solar power plants is relatively low at 17% on average. Of the 6,412 TWh electricity produced in China in 2017,[58] 118.2 TWh was generated by solar power, equivalent to 1.84% of total electricity production.[58]

Solar water heating is also extensively implemented, with a total installed capacity of 290 GWth at the end of 2014, representing about 70% of world's total installed solar thermal capacity.[59][60] The goal for 2050 is to reach 1,300GW of Solar Capacity. If this goal is to be reached it would be the biggest contributor to Chinese electricity demand.[61]

The main problem in China is the voltage drop when power is sent over very long distances from one region of the country to another.

Long distance inter-regional transmission have been implemented by using ultra-high voltages (UHV) of 800 kV, based on an extension of technology already in use in other parts of the world.[63]