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China risks flushing down the toilet half a trillion dollars on new coal plants, which according to a study released Monday, the country doesn’t even need.
The report, published by London-based the Carbon Tracker Initiative, argues that not only does China not new coal plants, but also that existing capacity may come under financial pressure by 2020 from power market reforms and carbon pricing, which continue to squeeze coal generation out of the country’s power mix.
As of July this year, China had 895 GW of operating coal capacity or 2,689 plants being utilized less than half the time, with another 205 GW of capacity under construction, which is inconsistent with the goals of Beijing’s 13th Five-Year plan, the document shows.
It is clear that China does not need any more coal capacity as existing plants are running not even half the time —Matthew Gray, senior analyst and the study’s author
It also argues that slower power demand growth and low carbon capacity targets will likely strand coal capacity. Additional capacity beyond existing plants is only required by 2020 if power generation growth exceeds 4% per year and coal plants are run at utilization rate of 45% or less, according to the report.
“It is clear that China is coming to terms with the fact it does not need any more coal capacity in a market where existing plants are not even running half the time,” said Matthew Gray, senior analyst and the study’s author. “The dynamic policy environment suggests China is trying to work out how to avoid wasting half a trillion dollars on unneeded coal plants.”
Given the expected increases in non-coal energy generation — hydro, wind, solar, gas, nuclear and biomass — coal generation in China could fall by up to 8% from 2015 to 2020, Gray warned.
“There are clear signs that Chinese coal generation is peaking, as the growth in alternative energy sources can meet lower power demand growth during the 13 FYP. This can only spell bad news for exporters betting on China propping up the seaborne thermal coal market in the future,” said James Leaton, Carbon Tracker’s head of research.
A drop in coal-fired power, combined with the resumption of domestic production, may kill China’s imports from overseas. The country, instead, could become a net exporter of coal again before 2020, negatively affecting seaborne thermal coal prices, the report concluded.
[gview file=”https://mining.com/wp-content/uploads/2016/11/China-overcapcity-crisis_infographic.pdf”]
4 Comments
Danny
“The report, published by London-based the Carbon Tracker Initiative…” – enough said, a very unbiased source…We can convince ourselves of how right we are, all the way to the abyss. Meantime China continues to develop its economy and becomes a stronger and stronger world power, based on very cheap and reliable coal generated electricity, while the “developed” West already began to have total power blackouts (see South Australia) and its economy is shrinking. This is at least partially due to extremely expensive and unreliable solar and wind energy.
Caper Nova Scotia
Apparently 1 analyst working with Carbon tracker report has solved China’s carbon issue…China has zero analytics experts working on coal generation, costs etc…a fear mongering liberal douche puff piece
CJ
Really? This article appears at odds with all of the data and surveys that have been coming out of China over the last 10 years.
Anopheles
What a bunch of politically correct greenshit.
Windmills DON’T produce energy 70% to 75% of the year. Solar DOESN’T produce energy 80% to 85% of the year.
So tell us, where’s power coming from when when alternative energy isn’t producing power?
If you want to store alternative generated power, to replace coal, then for wind, you would need 5 times the installed capacity of a similar sized coal plant. To be able to store enough power during the 25% of the time when the wind is blowing. (4 times for storing plus one feeding to grid)