Structural Changes In China’s Power Generation Capacity Under The ‘Dual Carbon’ Goals – Analysis

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By He Jun

China’s National Energy Administration has recently released the power industry statistics for 2022, and the changes in the country’s power generation composition as indicated in them are worthy of attention.

By the end of 2022, the cumulative installed power generation capacity of the country was about 2.56 billion kilowatts, a year-on-year increase of 7.8%. Noteworthily, the installed capacity of renewable energy reached 1.213 billion kilowatts, accounting for 47.3% of China’s total installed capacity of power generation, an increase of 2.5 percentage points from 2021, surpassing the proportion of coal power installed capacity for the first time.

According to data from the China Electricity Council, by the end of 2022, the coal-fired power generation installed capacity reached approximately 1.12 billion kilowatts, accounting for 43.8% of the total power generation capacity, a decrease of 2.9 percentage points from the previous year. By the end of 2021, China’s installed capacity for renewable energy power generation was still lower than that of coal power. During the same period, the installed capacity of its renewable energy power generation was 1.063 billion kilowatts, accounting for 44.8% of the total installed capacity of power generation, while it was 1.11 billion kilowatts for coal power, accounting for 46.7% of the total installed capacity.

Researchers at ANBOUND believe that China’s installed capacity of renewable energy exceeds the proportion of coal power for the first time, this itself is a milestone in the construction of its power generation capacity. The significance of this is that China’s ability to use renewable energy to generate electricity has exceeded coal’s ability to generate electricity, at least theoretically. It also indicates that under the targets of “dual carbon (i.e., carbon peaking and carbon neutrality)”, the country’s new installed capacity of renewable energy has grown rapidly, and investment in related fields too is on the rise. Data show that in 2022, China’s new installed capacity of renewable energy was 152 million kilowatts, accounting for 76.2% of its new installed capacity of power generation.

It should be noted that there is still a huge difference between the installed capacity and the actual power generation. Although the installed capacity of China’s renewable energy surpasses coal power for the first time, in terms of power generation, coal power is still the mainstay of the country’s power supply. In 2022, China’s coal power generation accounted for 58.4% of the total power generation, a decrease of 1.6 percentage points from the previous year. Meanwhile, the national renewable energy power generation reached 2.7 trillion kilowatts, accounting for 31.6% of the total electricity consumption, an increase of 1.7 percentage points from the previous year.

In 2022, China’s renewable energy installed capacity increased significantly, mainly due to the contribution of photovoltaic and wind power installed capacity, and the combined contribution of the two exceeded 80%. In 2022, the country’s new installed capacity of photovoltaic and wind power reached 125 million kilowatts, a year-on-year increase of about 22%, exceeding 100 million kilowatts for three consecutive years. As of the end of December 2022, the total installed capacity of photovoltaic and wind power in the country reached 760 million kilowatts, an increase of about 20% year-on-year, accounting for about 29.6% of the total installed capacity, an increase of 1.1 percentage points compared with 2021.

Although China’s total installed capacity of photovoltaic and wind power accounted for about 30% of the total, due to the volatility and intermittency of these two, its total power generation in 2022 only accounted for 13.8% of the total electricity consumption, an increase of 2% year-on-year, close to the domestic electricity consumption of urban and rural residents across the country. In terms of specific power generation, in 2022, the national photovoltaic and wind power generation reached 1.19 trillion kilowatts, an increase of 207.3 billion kilowatts from 2021, which was also a year-on-year increase of 21%.

From the perspective of power generation and electricity consumption, there is a significant difference (about 15.8 percentage points) between the actual proportion of photovoltaic and wind power generation and the proportion of installed capacity. This means that an important direction for improving the use of renewable energy in China in the future is to convert the installed capacity of power generation into power consumption capacity. This is to greatly increase the proportion of renewable energy power generation, allowing installed capacity of power generation to be effectively converted into renewable energy consumption and make a real contribution to the realization of the country’s dual carbon goals.

For China, the world’s largest energy consumer and carbon emitter, the changes in the composition of its energy installations should be recognized. Although the world has wavered on the issue of energy utilization and carbon emission reduction, China still closely adheres to it. The data shows that in 2022, the country’s renewable energy power generation is equivalent to reducing its domestic carbon dioxide emissions by about 2.26 billion tons, and the exported wind power photovoltaic products could reduce carbon dioxide emissions of other countries by about 573 million tons, a total reduction of 2.83 billion tons, accounting for about 41% of the global carbon emission reductions converted from renewable energy in the same period. Hence, China’s efforts to reduce carbon emissions are in fact exerting effectiveness both domestically and internationally.

As a developing country, insisting on realizing the “dual carbon” goals means that China has to bear a huge opportunity cost in economic development. However, the push to achieve the goals has never been a simple goal of environmental protection or climate change. From a broader perspective, there are at least two objectives in such a development. The first is the environmental goal of carbon emission reduction; the other is economic development transformation. China expects its carbon emission reduction will force the transformation of economic development, which includes multiple goals such as industrial transformation, energy consumption transformation of the whole society, technological innovation, low-carbon industry innovation, and energy security foundation transformation. If more obvious achievements can be made in this direction, then it may greatly reduce the situation where its energy security is being constrained by others in its future medium and long-term development. The strategic proposal for China to build a “hydrogen energy society” put forward by ANBOUND several years ago is completely consistent with this energy transformation strategy.

Final analysis conclusion:

By the end of 2022, the proportion of China’s installed capacity of renewable energy has exceeded that of coal-fired power. This small progress in its pursuit of energy transformation can be regarded as a symbolic mark in its carbon reduction development.

He Jun is a researcher at ANBOUND

Anbound

Anbound Consulting (Anbound) is an independent Think Tank with the headquarter based in Beijing. Established in 1993, Anbound specializes in public policy research, and enjoys a professional reputation in the areas of strategic forecasting, policy solutions and risk analysis. Anbound's research findings are widely recognized and create a deep interest within public media, academics and experts who are also providing consulting service to the State Council of China.

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