The rankings chart in this year’s annual global market report from the Renewable Energy Policy Network for the 21st Century (REN21) reads like an Olympic gymnastics medals table. The United States features heavily, as do Germany, Brazil and Canada, but there is one country that appears more frequently at the top than any other: China.
China tops renewables charts
In terms of 2014 renewable energy indicators, China ranks number one for overall renewables investment; for wind and hydro capacity; for solar thermal capacity; and for capacity additions in hydropower, solar PV, and wind power. It also holds the largest amount of renewable capacity in the world, both with and without hydropower.
In fact, of the 26 indicators cited by REN21, China ranks as number one in 11 categories. This bears testament to the remarkable energy transformation that the country has been undergoing since it first opted in to global efforts to tackle climate change.
Admittedly, some of these rankings can be accounted for by sheer volume. China is the world’s largest energy consumer, devouring 23% of all energy produced in the world in 2014. It also consumes a shocking 50% of all the coal, while China’s hydro production accounts for 27.4% of all that generated globally.
So it is perhaps not a surprise that the other elements of its energy mix are also large compared to those of other, smaller territories.
Growing fast
However, what is striking about China’s adoption of renewables has been the rate at which the growth has occurred compared to demand growth, especially in the power sector. Since 2004, non-hydro renewable power generation has grown exponentially, from around 3.9 TWh to around 234.6 TWh in 2014, a rise of around 60 times.
By contrast, China’s primary energy demand has not even doubled. It has risen 88% since 2004, an impressive figure by global standards, but not comparable to the country’s renewables growth.
The majority of China’s renewables growth has occurred in the wind, hydro, and solar PV sectors. At the end of 2014, installed wind capacity was just under 115 GW – although some of this was likely not yet operational due to grid constraints.
Hydro capacity stood at around 280 GW at the end of 2013, with annual generation levels at 892 TWh. Solar PV capacity was nearing 30 GW by the end of 2014, up from an official 2013 figure of 16 GW, which generated 8.4 TWh that year.
As a result, wind and solar are now garnering a larger share of the coal-dominated power mix, holding a share of approximately 2.7% in 2013. With hydro, this figure rises to 10%.
Heating up in China
By contrast, non-hydro renewables account for just 1.78% of the primary energy mix, with hydro adding an extra 8%. But China is also making considerable progress outside the power sector, most notably with its heat programme.
According to REN21, China held a massive 70% of the world’s total capacity of solar thermal in 2014, with approximately 290 GWth of installed capacity at the end of the year. Similarly, it led the world in geothermal (direct use, i.e. not heat pumps) capacity, with 6.1 GWth installed at the end of 2014, generating 20.6 TWh per year.
Moreover, the country has made significant progress with decentralising its heat network, with 30% of its heat needs derived from district heating networks.
Transport proving difficult
However, as in most parts of the world, transport remains the most difficult nut to crack. Despite increasing its biofuels production by 3% to 2083 thousand tonnes of oil equivalent (toe) in 2014, China’s transport sector still lags behind its power and heat sectors with regard to renewables.
At present, E10 fuel – a blend of 10% bioethanol and 90% gasoline – accounts for around 25% of China’s transportation fuel needs, requiring around 2.3 million tonnes of bioethanol per annum. Moreover, the country has had some success with electric vehicles, most notably two-wheelers which now number around 150 million, more than half of China’s entire two-wheeler stock.
But wider take-up of biofuels and EVs has been slow. Biofuels production itself is fraught with problems, most notably the availability of feedstock (cassava and corn), the bulk of which is imported, and a lack of policy direction at government level.
A subsidy for the production of grain-based ethanol is due to end this year, while biodiesel derived from anything other than used cooking oil is currently illegal for use in transportation, except in a few pilot cities.
However, the Innovation Centre for Energy and Transportation (ICET) in Beijing estimates that the policy environment for advanced biofuels looks more optimistic, with a range of subsidies and tax exemptions still in place, and demonstration projects for second-generation ethanol production scaling up.
Hydrogen fuel cells for vehicles
Dr Neil Wang, managing director of consultancy Frost & Sullivan’s Greater China unit, notes that the most promising transport technology at present is the hydrogen fuel cell, although this too is facing challenges.
‘In China, the hydrogen fuel cell car is still in the development and testing phase, and it is expected to be launched in the market within the next five years,’ says Wang. ‘Fuel cells have many advantages, such as zero pollution and a-few-minute quick filling, but the technology is not mature enough, the cost is too high, and no hydrogen charging station is available yet. With the domestic automobile enterprises’ increasing R&D investment in fuel vehicles, these issues will be less of a problem in the next three to five years.’
Ambitious capacity targets
In the power sector, unprecedented levels of capacity installations are being driven by an ambitious set of government-mandated capacity targets, outlined in China’s 12th Five Year Plan.
The targets are subject to change (and have been, frequently), but at the time of writing China aims to have 290 GW of hydro by 2015, 100 GW of wind (including 5 GW of offshore wind), 35 GW of solar (including 3 GW of solar thermal power), and 13 GW of biomass.
By 2020, China is targeting for 350 GW of hydro, 200 GW of wind, 100 GW of solar, and 30 GW of biomass. In the heat sector, China is targeting 560 GWth of solar thermal by 2020.
These targets are backed by a comprehensive set of subsidies and policy support for renewable power, including a feed-in tariff style premium on the regulated coal-based price of power for onshore wind, solar PV and biomass, as well as a programme of capital grants for renewable heat.
Regional carbon markets have been rolled out in seven locations in the past two years, with plans to merge them into a single national market by 2017.
The Five Year Plan targets see wind and solar capacity accelerating dramatically in the next five years, while hydro stabilises after a period of strong growth. According to the International Energy Agency’s (IEA) base case scenario, China’s renewables capacity can be expected to grow by 342 GW in the period 2013–2020, with onshore wind providing the bulk of this growth at 17 GW each year.
Solar PV and hydro are not far behind, adding 13 GW and 15 GW each year, respectively, as unit costs for solar PV continue to drop and China steers subsidies towards distributed generation networks. Growth in the biopower sector, meanwhile, is expected to be more muted at 2–4 GW each year, as China grapples with issues accessing feedstock supplies.
Part II of this feature discusses the Chinese drive to renewables, and the challenges it faces in trying to meet its growing demand for renewable power.