China’s coal power generation sector is expected to embrace positive changes following power crunch in some areas this year and a year ago, which though resulted from quite different reasons.
The world’s second-largest economy had moved to re-boost coal-fired power projects since last year after years of steering away from the fossil fuel. This change came as power shortages in some regions since last year highlighted coal power’s role in stabilizing electricity supply against the weak flexibility of renewables in dealing with unusual conditions.
China encountered power rationing in some areas last year, as rallied coal prices significantly raised generators’ cost of power generation. This summer’s shortfall, however, was mainly due to slumped hydropower output and high residential air-conditioning demand amid persistent heat waves.
China’s investment in coal-fired power projects reversed years of decline in 2021 to log a 21.5% year-on-year rise, and gained even quicker growth of 71.8% in the first half of 2022, data from the China Electricity Council showed.
The approval of new coal power units gathered pace in the fourth quarter last year, with newly-approved installations accounting for 59.3% of the whole year’s total. Newly approved capacity reached 8.63 GW in the first quarter this year, up 103.1% on the year.
This was in stark contrast with the continuous decrease of investment over 2016-2020, when the focus was on new energies. Coal’s share in new installations dropped to 28.8% in 2022 from 44.2% in 2016, 34.8% in 2017, 31.8% in 2018 and 42% in 2019.
China’s power system is facing growing oscillation in both power source and power load sides. Power supply is seeing increased fluctuation due to a higher share of unstable new energies, while power demand undergoes clear seasonality as demand from households and the tertiary sector gains a higher share, compared with previous dominant industrial consumption.
Orderly power use may become normal in the future, owing to increased difficulty of power adjustment and insufficient peak-shaving capacity resulted from previously reduced investment, Cinda Securities pointed out in a report.
The focus has been apparently shifted back to coal power with more policy and investment supports since this year, and the pace could accelerate especially after the recent power crunch in Sichuan.
The National Energy Administration has urged quicker approval, construction and commissioning of supportive power projects in some provinces after Sichuan’s power shortage, in order to ensure supply-demand balance of electricity during the 14th Five-Year Plan period.
Yet the requirement for coal consumption threshold and benchmark load for both newly-built and existing power units indicated China’s clearer direction in developing coal-fired power, instead of the previous “one-size-fits-all” approach, while striving to meet its carbon goals.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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