China’s coal consumption decreased from 70 percent of total energy to 55 percent over the last decade. But it remains above the global average of 27 percent.
The decrease in coal consumption has come primarily from a transition towards natural gas and non-fossil fuel sources like solar, wind and hydro. The scale of transformation in the country is rapid. Its first large-scale solar project developed without subsidies was built in just three months.
The country now has the largest installed capacity for wind and solar energy in the world, said Zhang Jie, Vice Chairman and General Secretary, Energy Investment Professionals Committee, Investment Association of China. Speaking at Asian Utility Week 2019, he discussed three trends in China’s transition to renewables.
1. Electric vehicles
China is the world’s largest oil importer and over half of its oil consumption in 2018 was in transportation. “Oil security in China is a transportation issue. That’s why from central to local government, we are now taking great efforts to promote electric vehicles. It will be a huge trend in China,” Zhang said.
The government has spent over $60 billion in the last decade to create an electric vehicles industry and it plans to invest the same amount over the next decade, according to Quartz. China has supported this with policies to reduce the number of licences available for gas-powered cars.
Another reason for the focus on electric vehicles is that they serve as mobile storage of excess energy in the grid. EV users are being encouraged to charge their vehicles at night when electricity prices are lower, freeing up capacity in the grid. “They can store that extra energy and provide electricity when there is not enough.”
2. Predictive grids
A challenge of transitioning to renewable energy is that its supply is less reliable. China wants to use weather data to predict energy supply in the future, Zhang said. “Digitalisation is a trend of our energy transition. In producing solar power, we use big data to predict future solar power generation.”
It also plans to use data on energy demand to determine how energy should be distributed across the grid. “This is why IT should be involved in the energy development. We’re implementing this in demonstration projects in China.“
Artificial intelligence will play a big role in China’s energy transition, he added. “From energy generation to energy consumption, it will be smartly managed by big data and cloud computing and advanced technologies in a more efficient way. “
3. Future investment
While recent reports show that China’s solar energy installations dropped to half of its 2017 capacity, it remains the world’s largest market for renewable energy.
Investment opportunities in China’s renewables industry over the next five years will be massive, Zhang said. There will be $160 billion of investment in solar and $184 billion in wind power in China. $25 billion of investments will go to biomass energy. “It will take a long time to decrease our coal percentage and replace it with renewable oil and gas,” he added.
China’s rate of energy transition so far has been unprecedented. Where it goes next will have global impact on our climate, economies and politics.