To tackle climate change, China must overhaul its vast power grid

Beijing

ONE of the most pressing challenges for China to meet its pledge to cap carbon emissions this decade and pivot toward renewables is overhauling its electricity grid, officials and analysts say. Beijing's surprise announcement last year that it would hit peak emissions by 2030 and become carbon neutral by 2060 could presage the biggest reduction in projected global warming of any climate commitment to date, researchers say.

But building new solar plants and wind farms is the easy part, analysts say. Upgrading the grid that transmits that green power to faraway consumers could be five times more costly. "It's the first step in this long journey," said Chunping Xie, an expert on China's policies on climate change and energy at the London School of Economics and Political Science (LSE).

Investments in China's grid and associated costs are expected to exceed six trillion yuan (S$1.2 trillion) over the next five years, Mao Weiming, former chairman of State Grid, said in a speech in October.

China, the world's biggest electricity generator, power consumer and carbon emitter, has said it is aiming for renewable power to account for more than 50 per cent of its total electricity generation capacity by 2025, up from 42 per cent now. This mainly involves pivoting to solar and wind energy and away from coal, of which China is the biggest global consumer.

Beijing plans to more than double its solar and wind power capacity to 1,200 gigawatts (GW) by 2030, from 535 GW now. Such a drastic swing from coal, which generates a stable baseload power supply, to renewables, which can fluctuate with weather conditions, could play havoc with China's electricity network, officials say. A senior manager at China's State Grid - which manages 75 per cent of the country's network - told Reuters the system had already "reached its ceiling" of how many renewable sources it could handle and still maintain stable operations.

But China, which runs the world's largest power system with a total installed capacity of 2,201 GW (compared with 1,107 GW in the US), is pressing on. It has said it will force grid operators to buy at least 40 per cent of their power from non-fossil fuel sources by 2030, up from 28 per cent now.

Alex Whitworth, a research director at Wood Mackenzie, said the pace of grid investment would most likely be maintained until the end of the decade, and would be five times higher than the cost of building additional renewable plants in that period. Major costs involve new power lines, re-tooling hundreds of coal plants as backup generators, and ramping up storage capacity, analysts and officials say.

At least seven new ultra-high voltage power lines would be built over the next five years to better connect the country's far western regions, where solar, wind and hydropower plants are mainly located, to China's big cities, the State Grid said. China has 29 such lines already.

That build-out could cost an estimated US$34 billion. "We have reached a consensus that China will preserve coal plants, but only for emergency uses," said Shu Yinbiao, president of Huaneng Group, China's second-largest power generation firm, and a former State Grid president.

But China is struggling to promote costly modifications to coal plants allowing them to offset gyrations in renewable power. It typically costs 150 million yuan to upgrade a 300-megawatt coal plant. Only about 10 per cent of coal-fired power plants in China have been modified, showed data from State Grid and China Electricity Council. "China will need to establish a mechanism to make coal power unfavourable in the renewables' booming moment," said Zhang Shuwei, director at Draworld Energy Research Centre.

Some questioned China's commitment to renewable power plans given its lack of clarity on phasing out coal and continued expansion of new power plants. China put 38.4 GW of new coal-fired power capacity into operation in 2020, more than three times the amount built elsewhere. But all agreed tackling the power system is an essential first step of a project critical to the future of the planet.

"The world just can't achieve climate targets without China," said LSE's Dr Xie. REUTERS