China ban on new coal power eases clean energy waste, WRI says

[BEIJING] China's order to suspend coal-fired power plant approvals in some provinces will help alleviate grid congestion that has left clean-energy capacity idle, according to the World Resources Institute.

As part of efforts to prevent unnecessary competition between fossil fuels and renewables, the government will use an early warning mechanism to forecast and discourage local planning that may exacerbate coal power plant overcapacity, researchers Song Ranping and Hong Miao wrote in an April 27 blog post on the WRI's website.

Solar capacity in the nation has soared more than sevenfold since 2012, while wind has almost doubled as China seeks to derive 15 per cent of its energy from renewables and nuclear by 2020, according to Bloomberg data. The additional capacity has taxed the grid's ability to transmit the influx of clean power.

Some of China's renewable plants are idle as operators are unable to sell their output. The idle rate was 15 per cent for wind turbines last year and about 31 per cent for photovoltaics in the northwestern province of Gansu, according to data from the National Energy Administration.

State Grid Corp of China, which manages the electricity grid in the world's most populous nation, in March blamed a lack of planning for congestion in its network that forced authorities to limit the amount of power renewable energy generators can sell. Neither the technology the grid uses nor the availability of investment funds were problems, Chairman Liu Zhenya said.

The WRI concurs that technical hurdles aren't the main roadblock.

Despite a renewable energy law that prohibits curtailment, fossil fuel power plants in practice "have priority over renewables, leaving less room for solar and wind power in a country with a large overcapacity of coal-fired power," according to WRI.

"There is also a lack of clarity on how the renewable energy integration mandate should be enforced." Besides restrictions on new coal power plants, the nation is seeking to design more policies to utilize idle renewable capacity. In March, it issued management rules to set an annual minimum purchase guarantee for wind and utility-scale solar generation to ensure reasonable profit for those projects.

"For the first time, the management rules stipulate that renewable energy power plants be compensated by fossil fuel plants that squeeze out their share of guaranteed purchase, making it costly for fossil fuel plants to generate electricity that should have come from renewable sources," said WRI.

The NEA in March published guidelines calling for power producers to tap renewable sources for at least 9 per cent of their output by 2020. The guidelines, which break down targets for 31 regions, exclude hydroelectric power as a renewable source and don't cover power producers with a specific focus on non-fossil fuels.

These latest actions "are a significant step to see that less renewable energy is wasted in China," said WRI. "They also reflect the government's attempt to tap into the power of the market to address the challenge."

BLOOMBERG