电力增长零碳化（2020-2030）：中国实现碳中和的必经之路（2020年）英

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Energy

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TIT

CHINAZERO-CARBONELECTRICITY

GROWTHINTHE2020S:

AVitalStepTowardCarbonNeutrality

BYROCKYMOUNTAININSTITUTE,ENERGYTRANSITIONSCOMMISSION

AUTHORS&ACKNOWLEDGMENTS

AUTHORS

YiyanCao,JiChen,BingqiLiu,AdairTurner(EnergyTransitionsCommission),andCarolineZhu.

*Authorslistedalphabetically.Allauthorsfrom

RockyMountainInstituteunlessotherwisenoted.

OTHERCONTRIBUTORS

KobenCalhoun,TingLi

CONTACTS

YiyanCao,ycao@

KobenCalhoun,kcalhoun@

SUGGESTEDCITATION

YiyanCao,JiChen,BingqiLiu,AdairTurner,and

CarolineZhu,ChinaZero-CarbonElectricityGrowthinthe2020s:AVitalStepTowardCarbonNeutrality,EnergyTransitionsCommissionandRockyMountainInstitute,2021,

/urlhere

.

AllimagesfromiStockunlessotherwisenoted.

ACKNOWLEDGMENTS

Theauthorsthankthefollowingindividualswhocontributedtimeandexpertisetothisresearchthroughinterviewsandsupport:

ClydeLoutan,CaliforniaISO

LouiseClark,UKNationalGrid

MarkDyson,RockyMountainInstitute

TheteamwantstothanktheETCCommissionersandtheETCnetworkfortheiractivecontribution.

SpecialthankstotheAngelaWrightBennett

Foundation,BloombergPhilanthropies,ClimateWorksFoundation,QuadratureClimateFoundation,SequoiaClimateFund,andTheWilliamandFloraHewlett

Foundationfortheirsupportofthisreport.

*Organizationslistedalphabetically.

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ABOUTUS

Energy

Transitions

commission

ABOUTENERGYTRANSITIONSCOMMISSION

TheEnergyTransitionsCommission(ETC)isacoalitionofgloballeadersfromacrosstheenergylandscape:

energyproducers,energy-intensiveindustries,equipmentproviders,financeplayers,andenvironmentalNGOs.Ourmissionistoworkouthowtobuildaglobaleconomythatcanbothenabledevelopingcountriestoattain

developedworldstandardsoflivingandensurethattheworldlimitsglobalwarmingtowellbelow2°Candas

closeaspossibleto1.5°C.Forthisobjectivetobereached,theworldneedstoachievenet-zerogreenhousegasemissionsbyaroundmid-century.

ABOUTROCKYMOUNTAININSTITUTE

RockyMountainInstitute(RMI)—anindependentnonprofitfoundedin1982—transformsglobalenergyuseto

createaclean,prosperous,andsecurelow-carbonfuture.Itengagesbusinesses,communities,institutions,andentrepreneurstoacceleratetheadoptionofmarket-basedsolutionsthatcost-effectivelyshiftfromfossilfuelstoefficiencyandrenewables.RMIhasofficesinBasaltandBoulder,Colorado;NewYorkCity;Oakland,California;Washington,D.C.;andBeijing.

TABLEOFCONTENTS

1.INTRODUCTION

5

2.THEECONOMICCASEFORZERO-CARBONPOWER

10

3.TECHNICALGRIDMANAGEMENTCHALLENGESARESOLVABLE

21

4.BALANCINGSUPPLYANDDEMANDBYHOUR,DAY,ANDSEASON

29

5.POLICIESTOACHIEVETHE2030OBJECTIVE

54

APPENDIX

59

ENDNOTES

61

1

INTRODUCTION

INTRODUCTION

AttheUnitedNationsonSeptember22,2020,PresidentXiJinpingcommittedChinatoachievecarbonneutralitybefore2060andtopeakemissionsbefore2030.1This

wasahugelyimportantstepforwardintheinternationalfightagainstclimatechangeandreflectsChina’s

determinationtoprovideresponsiblegloballeadership.

Chinacanachievecarbonneutralityandbecomea

fullydeveloped,richeconomyby2060andpotentiallyasearlyasby2050.AsoutlinedintworecentreportsbytheEnergyTransitionsCommission,onefocused

ontheglobaleconomyandonespecifictoChina,2it

isundoubtedlypossiblefortechnologicallyadvancedeconomiestoachievezerocarbonbymid-centuryataveryloweconomiccost.

Thekeytoachievingthisistoelectrifyasmuchoftheeconomyaspossibleandtoensurethatalmostall

electricityisgeneratedwithzero-carbonresourceswellbeforethetargetdateforoverallcarbon

neutrality.Countriesaroundtheworldareincreasinglyfocusedontheneedandopportunitytodecarboniseelectricitysystemsandaresettingtargetsaccordingly.

•TheUKisnowlegallycommittedtoachievenet-zeroGHGemissionsby2050,withagoaltoachievea

zeroornear-zerocarbonelectricitysystemby2035.

•President-ElectBidenproposesthattheUnited

Statesachieveacarbon-freepowersectorby2035andreachnet-zeroemissionsnolaterthan2050.

ArecentanalysisfromTsinghuaUniversity’s

InternationalCenterforClimateChangeand

SustainableDevelopment(ICCSD)showshowChinacanmeetthe2060orearliercarbonneutralitytarget,alignedwithlimitingglobalwarmingto1.5°C.

Inallcrediblescenariosandinallcountries,electricitydecarbonisationhastoleadthewaytobroader

economy-widedecarbonisation.Whathappensin

China’selectricitysysteminthe2020sistherefore

vitalbothtopeakemissionsbefore2030andtothe

credibilityofthe2060orearliercarbonneutrality

target.Chinamustsignificantlyaccelerategrowthin

zero-carbonpowerinvestmenttobeonapathtomeetPresidentXi’sobjective.Anynewcoalinvestment

threatenstocreateassetswhichwilleithermakethetargetunattainableorwillhavetobecloseddown

wellbeforetheendoftheirusefullife.Thiswould

createawasteofinvestmentresourcesandadditionalchallengestodecarbonisingthepowersystem.

TheappropriatestrategycompatiblewithChina’s

long-termcarbonneutralitytargetshouldtherefore

betoensurethatmovingforwardalmostallgrowthinChina’selectricitygeneratingcapacityiszerocarbon,withnonewcoalinvestment.However,Chinais

continuingtobuildnewcoal-firedplantswithabout20gigawatts(GW)approvedfromJanuarytoJune2020,whichishigherthanthetotalcapacitypermittedeachyearinthepastfouryears.i,3

Thisreflectsmultiplefactors,includingactualor

perceivedincentivesthatencourageprovincesto

takeactionsincompatiblewiththenationalobjective.Onefactoristhemisguidedbeliefthatitisdifficult

oreventechnicallyimpossibletointegratenewrenewablesupplywithoutadditionalcoalsupply.

Anotherfalseassumptionisthatthezero-carbon

electricitysupplywillnotbeabletogrowfastenoughtomeetexpandingdemandinthe2020s.Thisreportdemonstrateswhythesebeliefsaremistakenandwhyapolicyofalmostallnewgrowthfromzero-carbon

sourcesisfeasibleandeconomicallyoptimal.

By2050alargelydecarbonisedChineseeconomywillconsumeabout15,000terawatt-hours(TWh)of

electricity,aboutdoublethecurrentlevel.Thiswill

entailsomesectorsandactivitiesthatcurrentlyusefossilfuels—suchassurfacetransportandresidentialheating—achievingclosetofullelectrification.By

iThemajorityofthenewlypermittedprojectsarenotreplacementsforretiredsmallerunits.

6|ROCKYMOUNTAININSTITUTE

TWh

INTRODUCTION

2030,studiessuggestChina’selectricitydemandwillrangefromabout10,000to12,000TWhaseconomicgrowthcontinuesandaselectrificationspreadstonewsectors(Exhibit1).

Inthisreportwethereforeassessascenariofor2030alignedwithwhatisneededtodecarboniseChina’s

powersectorby2050;wewillrefertothisastheZero-CarbonInvestmentScenario.Thisscenario,showninExhibit2,includesthefollowingassumptions:

•electricitysupplyreaches11,000TWhby2030,anincreaseof54%abovecurrentlevels,reflectinganaveragegrowthrateof4%peryear;

•nonewcoalsupplyisaddedbeyondthe1,041GWinplacein2019,butwithaslightincreaseincoalgenerationasexistingassetsareusedmoreintensely;ii

•variablerenewablescapacityincreasesfrom408GWin2019to1,650GWin2030—whichequates

toabout110GWannually—withvariablerenewablegenerationaccountingfor28%oftotalgenerationinthatyear;and

•totalnon-fossilfuelgenerationreaches53%ofthetotal,slightlyabovethetargetof50%proposedbyChina’sgovernmentin2016.4

EXHIBIT1

ComparisonofChinaElectricityDemandin2030

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

Accelerated

electrification

scenario

StateGridERI:ChinaEnergy&

ElectricityOutlook2019

penetrationsystem

roadmapand

pathway

CNREC:China

Renewable

EnergyOutlook

2018

CNREC:China2050

Highrenewable

RFscenario(highefficiency)

Businessasusualscenario

Businessasusualscenario

Below2degreescenario

ReinventingFire:China

HighREscenario

iiAsconstructionofcoalpowerplantscurrentlyunderwayaddsnewcoalcapacity,itisbeingoffsetbyretiringsmaller,inefficientunits.However,thetotalcapacityshouldnotexceedthecurrentamountofcapacity,givenincreasingstrandingrisks.

CHINAZERO-CARBONELECTRICITYGROWTHINTHE2020S:AVITALSTEPTOWARDCARBONNEUTRALITY|7

Generation(TWh)Capacity(GW)

INTRODUCTION

EXHIBIT2

GenerationandCapacityMixin2030undertheZero-CarbonInvestmentScenarioiii

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

12,000

10,000

8,000

6,000

4,000

2,000

0

2019

2030

Coal

OffshoreWind

NaturalGas

Hydro

Solar

Biomass

OnshoreWindNuclear

2019

2030

Coal

OffshoreWind

NaturalGas

Hydro

Solar

Biomass

OnshoreWindNuclear

iiiTheillustratedassumptionsofthescenarioareintheAppendix,TableA

8|ROCKYMOUNTAININSTITUTE

INTRODUCTION

Thisscenariowouldneedtobefollowedbyfurther

rapidzero-carbonsupplyexpansionfrom2030to

2050andbythegradualeliminationofexisting

coalgeneration—unlessfittedwithcarboncapture

andstorage—duringthattimeframe.Achieving

thisscenariowillhelpmakethe“peakingbefore

2030”objectiveattainableandputChinaonapath

compatiblewithits2060objective.

Thispaperdescribeswhymeetingthegrowthalmost

entirelyfromzero-carbongenerationsourcesisfeasible

andwhatneedstohappentodeliverit,infoursections.

1.Theeconomiccaseforzero-carbonpowerandthe

pathtolow-costgreenelectricity

2.Thetechnicalfeasibilityofrapidlyexpanding

variablerenewableenergy(VRE)generation

3.Approachestosuccessfullybalancingsupplyand

demandinasystemwithanincreasingshareofVRE

4.Thepoliciesrequiredtodeliverzero-carbon

electricitygrowththrough2030andbeyond

CHINAZERO-CARBONELECTRICITYGROWTHINTHE2020S:AVITALSTEPTOWARDCARBONNEUTRALITY|9

2

THEECONOMICCASEFOR

ZERO-CARBONPOWER

LCOE($/MWh,2019real)

THEECONOMICCASEFOR

ZERO-CARBONPOWER

Acrosstheworld,renewableelectricitygenerating

costsareincreasinglyfallingbelowthoseoffossil

fuels,andthisistruealsoinChina.ButChinamust

adjustitspoliciestoensurethatrenewablecosts

continuetofallasrapidlyaspossibleandzero-carboninvestmentgrowsasfastasneeded.

RENEWABLESCOSTSFALLACROSSTHEWORLD

Thecostofrenewableelectricitygenerationhas

fallendramaticallyoverthepast10years.Estimatesoftheglobalaveragelevelizedcostofelectricity

(LCOE)forsolararedown85%,onshorewindisdown60%,andoffshorewindcostshavenowstarted

arapidfall,downover60%injustfiveyears.5In

favourablelocationsbidauctionpriceshavebeen

farlowerstill.Thus,whiletheestimatedaverage

globalLCOEforsolarPVisabout$50permegawatt-hour(MWh),auctionsinCalifornia,Portugal,andtheMiddleEasthaveseenpricesatorbelow$20/MWh.AndwhiletheglobalaverageoffshorewindLCOEisestimatedatabout$90/MWh,arecentauctionintheUKwasclosedatabout$51/MWh.6

EXHIBIT3

GlobalLCOEBenchmarksforSolarandWind,2009–2020

362

347

PV,fixedaxis

Offshorewind

PV,tracking

78

Onshorewind

50

44

39

200920102011201220132014201520162017201820192020

190

400

350

300

250

200

150

100

50

0

111

Source:BloombergNEF

CHINAZERO-CARBONELECTRICITYGROWTHINTHE2020S:AVITALSTEPTOWARDCARBONNEUTRALITY|11

THEECONOMICCASEFORZERO-CARBONPOWER

Inmanycountries,solarandwindarenowcompetitivewithbaseloadfossilfuelgeneration,andinsome

countriesrenewablesplusstorageisbecomingacheaperwaytoprovidepeakingpowerthangas

turbines.EstimatesfortheUnitedStatesshowthatsolarorwindwithtaxcreditsarenowcheaperthan

combinedcyclegasturbine(CCGT)plantsinallstates(Exhibit4),andinseveralUSstatesordersfornewgaspeakingplantshavebeencancelledinfavourofsolarPVplusbatterycombinations.7

EXHIBIT4

CheapestSourceofNewBulkElectricityintheUnitedStates,2020

Excludingtaxcredits

NewEngland$38/MWh

MISO

CAISO

$29/MWh

$42/MWh

Southwest

$26/MWh

Southeast$32/MWh

UtilityPV–tracking

Note:Regionsfollowstateboundariesandthereforedonot

mapperfectlytoISOterritories.Thenumbersrepresentthe

benchmarkLCOEforeachISO.

NewEngland$47/MWh

Includingtaxcredits

OnshoreWind

Gas–CCGT

Southwest$32/MWh

Northwest$35/MWh

Northwest$37/MWh

Southeast$35/MWh

ERCOT$26/MWh

CAISO

$35/MWh

NewYork$36/MWh

SPP

$27/MWh

NewYork$44/MWh

PJM

$34/MWh

MISO

$37/MWh

SPP

$16/MWh

ERCOT$15/MWh

$27/MWh

PJM

Source:BloombergNEF

12|ROCKYMOUNTAININSTITUTE

LCOEvs.runningcosts($/MWh,2019real)

LCOEvs.runningcosts($/MWh,2019real)

THEECONOMICCASEFORZERO-CARBONPOWER

Lookingforward,thesecostreductionsarecertaintocontinue.Asaresult,solarandwindcostsinsome

countrieswillsoonfallbelowthemarginalcostof

runningexistingcoalorgasplants.Thattippingpointwillbereachedinmanycountriesduringthe2020s,andtherenewableenergyadvantagewillsteadily

widenovertime.Exhibit5outlinesthecosttrajectoryintheUnitedStateswhererenewablesarebeginningtooutcompetebothnewcoalinvestmentsandmanyexistingcoalplants,puttingadditionalpressureon

theseplantsandthecompaniesthatownthem.8

EXHIBIT5

EconomicComparisonsofNewRenewablesandExistingFossilGenerationintheUnitedStates

Newutility-scalePVversusexistingcoalandCCGT

100

90

80

70

60

50

Coal

40

30

20

10

0

2020202520302035204020452050

Note:AllLCOEcalculationsexcludetax-creditsandcurtailment.TherangeoftheLCOErepresentsarangeofcostsandcapacityfactors.Inthecaseofoffshorewind,ourassessmentincludesthegeneratingasset,theoffshoresubstation,theexportcable,andtheonshoresubstation.Forthermalplants,theshort-runmarginalcostrangerepresentsadiversityofplantefficienciesinthefleet.

100

90

80

70

60

50

40

30

20

10

0

NewwindversusexistingcoalandCCGT

2020202520302035204020452050

Offshorewind

Onshorewind

TrackingPV

CCGT

CCGT

Coal

Source:BloombergNEF

CHINAZERO-CARBONELECTRICITYGROWTHINTHE2020S:AVITALSTEPTOWARDCARBONNEUTRALITY|13

$/MWh

THEECONOMICCASEFORZERO-CARBONPOWER

RENEWABLESANDOTHERZERO-

CARBONCOSTSINCHINA

TheglobalpictureismirroredinChinawheresolarcostsarealreadyfallingbelowthecostofcoal

generation,andonshorewindwillsoonfollow.

Offshorewindcostswilllikelybecomecompetitiveduringthe2020s,andChina’snuclearcostsare

broadlycompetitivewithcoaltoday.

Solarcostsalreadybelownewcoal

EstimatesfromBloombergNEF(BNEF)suggestthat

theLCOEofsolarinChinaisnowbetween$29/MWhand$59/MWh,makingitcompetitivewithnewcoalinmostlocations(Exhibit6).9Priorto2019,solarcosts

werecompensatedviaafixedfeed-intariffthatwas

designedtodeclinegraduallyovertime.In2019Chinaswitchedtoanauctionsystem.Thelatestpermitting

outcomesandauctionresultshavebroadlyconfirmedBNEF’sestimatesthatsolarisnowcompetitivewith

newcoalandwillbeincreasinglycompetitivewithexistingcoal.

Auctionresultsin2019revealeda30%reductionin

solarcostscomparedto2018projectcosts,and2020broughtafurther20%reduction,similartoBNEF’s

estimateofa26%declineinLCOE.ivAsaresult,while

the2019solarauctionstrikepriceswerestillhigher

thanthenewcoalbenchmarkpriceinmostprovinces,in2020theaveragesubsidyhadfallentojust$5/MWh.vThelowestsubsidieswerejust$0.01/MWh(Exhibit7).10

EXHIBIT6

LCOEofDifferentGenerationSourcesinChina,2020

276

250

235

104

93

97

130

116

132

121

59

62

69

66

68

75

83

29

33

41

29

41

5051

200

300

250

100

150

50

0

Source:BloombergNEF

ivCostreductionratesarecalculatedbasedonauctionresultsreleasedbytheNationalEnergyAdministration.vThesubsidyisthepricepremiumpaidtodevelopersovercoalbenchmarkprice.

14|ROCKYMOUNTAININSTITUTE

RMB/kWh

THEECONOMICCASEFORZERO-CARBONPOWER

Thesecostreductionsarecertaintocontinue,

andwouldimplyattainableauctionpricesin2021

significantlybelowthecoalbenchmarkpricein

almostallprovinces(Exhibit8)andinmanyprovincesbelowthecoaltransactionprice(Exhibit9).viThisis

alignedwiththemarketforecastthatsubsidieswillnolongerbeavailable.

Solarsubsidiesarebeingphasedoutwithsolar

costsbecomingcompetitiveenoughtomake

unsubsidisedprojectseconomic.In2020,33GWofnewunsubsidisedprojectswereapprovedandnearly50GWofunsubsidisedsolarisunderdevelopment

across20provinces.

EXHIBIT7

ComparisonofNewCoalandSolarAuctionsinChina,2020

CoalbenchmarkpriceAuction2019Auction2020

0.5

0.2

0.6

0.3

0.4

0.1

0

viTransactionpricesarethepricesformid-to-long-termcontractsandusuallyfallbetweenmarginaloperatingcostsandall-incosts.Thiscanprovideinsightintothecostsofrunningexistingplants.

CHINAZERO-CARBONELECTRICITYGROWTHINTHE2020S:AVITALSTEPTOWARDCARBONNEUTRALITY|15

THEECONOMICCASEFORZERO-CARBONPOWER

RMB/kWh

EXHIBIT8

ComparisonofNewCoal,2020SolarAuctions,andFeasible2021SolarPricesinChinavii

CoalbenchmarkpriceAuction2020Feasiblelowestpricein2021

0.5

0.2

0.3

0.4

0.1

0

RMB/kWh

EXHIBIT9

ComparisonofExistingCoal,2020SolarAuctions,andFeasible2021SolarPricesinChina11

CoalTransactionpriceAuction2020Feasiblelowestpricein2021

0.5

0.2

0.3

0.4

0.1

0

vii2021attainablepricesarecalculatedbyapplying20%reductionrateon2020lowestpermittedprices.

16|ROCKYMOUNTAININSTITUTE

THEECONOMICCASEFORZERO-CARBONPOWER

Onshorewindwillsoonbecheaperthancoal,withoffshorewindcompetitivebythelate2020s

Foronshorewind,majorchangesinthepolicy

frameworkhavemadeitmoredifficulttodiscernthelatestunderlyingcosttrend.However,providedthatfuturepolicysupportsthestrongvolumegrowth

requiredtomeetthe2030objectiveindicatedin

Exhibit2,costswillalmostcertainlysoonfallbelow

newcoalandbelowthecoaltransactionpricelaterinthe2020s:

•Chineseonshorewindcostshavedeclinedabout40%since2010andBNEFestimatessuggesta

rangeof$41/MWh–$62/MWhin2020,makingitalreadyhighlycompetitivewithnewcoal.

•Thisstrongdeclineseemedtomakeitpossibletoremovewindsubsidiesbeforesolar,withallwindsubsidiesduetoendafter2021(Exhibit10).

•Auctionsforwindwereintroducedin2018,but

manyprovincesdecidedtoholdnoauctionssincemanyhadalreadyhit13thFive-YearPlantargets

forquantityofwinddevelopment.Auctionresultsfortheprovinceswhichdidholdauctionsin2019(suchasTianjinandChongqing)producedbidsforsubsidiesinthe$10/MWh–$20/MWhrange,abovetheaverage$9/MWhinthe2019solarauctions.

•Newlypermittedsubsidy-freeprojectsin2020havebeenadisappointinglysmall11GW.

Thispatternofbothquantityandpricedevelopmentreflectsthefactthatthedeclaredendofthesubsidyregimeproducedasurgeofprojectconstruction

andwindturbineorderswhichtemporarilydroveup

costsandusedupproductioncapacity.Butprovidedstrongvolumegrowthresumes,majorcostreductionscanbeachieved.BNEFestimatesthataveragecostscouldfall30%toaround$35/MWhby2025andto

$30/MWhby2030,withmuchlowercostsinthe

mostfavoredlocations(Exhibit11).Apolicyofclearmedium-termquantitativetargets,plusauctionstocreatecostreductionincentives,willmaximisethecostreductionachieved.

OffshorewinddevelopmentsinChinahavebeen

limitedtodate,withonly6GWofinstalledcapacity

by2019.Thecurrentcosttobuildnewoffshorewindcapacityisestimatedtobesignificantlyabovenew

coalcosts.Withglobalcostsfallingrapidlyandthe

Chineseindustryrapidlydeveloping,costreductionscouldmakeoffshorewindcompetitivewithnewcoalbeyond2025.Clearquantitativetargets,suchas

Guangdong’sgoaltobuild30GWofoffshorewindby2030,willhelpdrivethesecostreductions.12

EXHIBIT10

RenewablesSubsidyPhase-OutTimeline

CODdeadline

Permittedbefore2019JanuaryPermittedin2019and2020

OnshoreWindEndof2020Endof2021

SolarNocleardeadline

CHINAZERO-CARBONELECTRICITYGROWTHINTHE2020S:AVITALSTEPTOWARDCARBONNEUTRALITY|17

LCOE($/MWh,2019real)

2020202520302035204020452050

THEECONOMICCASEFORZERO-CARBONPOWER

EXHIBIT11

EconomicComparisonofNew-BuildBulkGenerationinChina

Offshorewind

Onshorewind

100

75

50

25

0

CCGT

Coal

Furthercostdeclinesthreaten

existingcoal

Solarandwindarealready,orwillverysoonbe,thecheapestsourcesofnewelectricitygenerationin

China.Inaddition,bythelate2020s,BNEFestimatesthatnewwindandsolardevelopmentswilldeliver

electricitybelowthecostofmanyexistingcoal

plants(orcombined-cyclegasturbines),whichcan

makeexistingcoalassetsuneconomic(Exhibit12).

Thisdangerisexacerbatedbytheovercapacity

ofexistingcoalgeneration,whichcurrentlyhas

anaveragecapacityfactorof56%.Provincesin

northwestandsouthwestChina,whereabundant

renewableresourcesareavailable,arealready

facingthischallenge.Coalplantsarerunningatan

averagecapacityof35%intheseregions,resultinginsignificantfinanciallossesandstrandingrisks.

Source:BloombergNEF

Nuclearandhydropower

costscompetitive

BNEFestimatessuggestthatChinesenuclearpowercandeliverelectricityatabout$51/MWh–$68/MWh,

andcurrentpricesconfirmthislevel.Thismakes

zero-carbonnuclearfullycompetitivewithcoalas

aproviderofbaseloadelectricity.Chinesehydro

plantsalsodeliverzero-carbonelectricityatcosts

competitivewithcoal.Thetransactionpricesforhydroplantsareoftenaround$40/MWh,withsomeaslowas$30/MWh,significantlybelowtypicalcoalpower

transactionprices,reflectingverylowmarginalcostofrunninghydroplants.Itiscommonlyacknowledged

thathydroisthecheapestgenerationsourceinChina.

18|ROCKYMOUNTAININSTITUTE

LCOE($/MWh,2018real)

2019202520302035204020452050

THEECONOMICCASEFORZERO-CARBONPOWER

EXHIBIT12

LCOEofNewPVandOnshoreWindversusRunningCostsofExistingCoalandGasinChina

CCGT

Coal

Onshorewind

Utility-scalePV

70

60

50

40

30

20

10

0

Source:BloombergNEF

POLICYSPECIFYINGCLEAR

DEPLOYMENTTARGETSCANRESTORETHEPACEOFCOSTREDUCTION

China’spastdevelopmentofzero-carbonelectricityhasbeenveryimpressive:withover400GWofwindandsolarcapacityalreadyinplace,itleadstheworldinrenewabledeployment.Thisreflectsthesuccessofpastpolicy,withinitialsubsidiesandquantitative

targetsdrivingrapidindustryexpansionandresultingcostreduction.Certaintyaboutthequantitativepaceofexpansionhasenabledtheindustrytoachievetheeconomyofscaleandlearningcurveeffectswhich

havebroughtcostsdowntocompetitivelevels,notonlyinChinabutalsoglobally.

However,thecurrentpaceofzero-carbonpower

comingonlineisnotontracktomeetthelevels

neededby2030,inparticulartherateofwind

deployment.Asourscenariosuggested,toachievethelevelsrequiredin2030,Chinaneedstoadd

approximately650GWofsolarPV,600GWof

onshorewind,60GWofoffshorewind,110GWofhydro,and65GWofnuclearpower(Exhibit2).

Solarprojectapprovalsin2020arerunningat59GW,theannualpacerequiredtoachievethe2030amount,withunsubsidisedprojectsaccountingfor33GW.65GWofnewnuclearlooksfeasible,givenapipeline

ofaround12GWunderconstructionand22GWin

planningwithdefinedconstructionstartdate.The

additionof110GWofnewhydroisbackedbyabout

40GWofprojectsunderconstructionandover20GWintheplanningstage.However,thepaceofnewwinddevelopmentisoff-trackrelativeto2030levels.With

windsubsidiesphasingout,the11GWofapproved

unsubsidisedwindistooslowtomeetrisingdemand.

Anannualinvestmentpaceof55GWofwindperyearisundoubtedlyachievableifappropriatepoliciesareinplace:in2016and2017over30GWwaspermitted

CHINAZERO-CARBONELECTRICITYGROWTHINTHE2020S:AVITALSTEPTOWARDCARBONNEUTRALITY|19

THEECONOMICCASEFORZERO-CARBONPOWER

ineachyearaswindcapacityincreasesranaheadofthe13thFive-YearPlantargets.Anditislikelythatthepaceofprojectproposalandpermittingmaynaturallyincreasesomewhatoverthenextfewyearsaswinddevelopersandturbinemanufacturerscompletethebacklogofexistingprojectsandorders.Butthereisalsoadangerthatthepaceofinvestmentwillbetooslowforseveralyears,andthatnewcoalinvestments

willfillthegap,creatingunnecessarycostand

strandedassetslateron.

Theappropriatepolicyresponseistocreate

sufficientcertaintyaboutthequantityofwind(and

solar)projectstoensurethattheattainablecost

andpricereductionsareachieved.Experiencefromothercountriessuggestthatassolarandwindcostsapproachorfallbelowfossilfuelcosts,removing

theneedforsubsidies,itisstillimportanttoproviderenewabledeveloperswithpricecertaintyfora

largeshareoftheiroutput.Thisreducestherisksof

renewabledevelopmentandasaresultcutscostsandrequiredprices.