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New Energy World™
New Energy World™ embraces the whole energy industry as it connects and converges to address the decarbonisation challenge. It covers progress being made across the industry, from the dynamics under way to reduce emissions in oil and gas, through improvements to the efficiency of energy conversion and use, to cutting-edge initiatives in renewable and low-carbon technologies.
Why China needs to expand its energy storage capacity
26/6/2024
10 min read
Feature
As China races to reinvent its energy infrastructure, a landmark shift has placed non-fossil fuel sources at the core of its power generation capacity. While the growth in renewable energy is to be celebrated and installed capacity grows, grid connection and storage capabilities must keep up to ensure full utilisation, write Asia Society Policy Institute Senior Programme Officers Betty Wang (Climate) and Taylah Bland* of its China Climate Hub.
The Chinese energy transition is driven by a combination of policy support, technological advancements and economic incentives aimed at reducing the nation’s carbon footprint and enhancing energy security. As of early 2024, non-fossil fuel energy, including renewables like wind, solar and hydro, constitutes close to 55% of the total installed power generation capacity in China. This shift marks a substantial increase in renewable energy capacity, which now stands at 1.1bn kW. In contrast, coal-fired power plants have seen their capacity share decrease to 39.3%. However, despite this impressive growth in capacity, non-fossil energy still accounts for around 30% of power generation, according to Ember analysts.
Overcapacity is now a significant challenge in China’s power sector. This problem arises when the total installed power generation capacity exceeds the actual demand for electricity, leading to inefficiencies and economic losses. Over the past decade, China has dramatically expanded its power generation infrastructure to meet projected economic growth and energy demands. However, this expansion has often outpaced actual consumption, resulting in substantial idle capacity.
It is important to note that overcapacity is a nuanced term. The point here is that it’s not just that there is overcapacity but rather that the capacity between different types of energy needs to be better managed. It is necessary to distinguish between overcapacity for baseload fossil fuels – which is very costly – and overcapacity for renewables, which is largely inevitable due to their low-capacity factor.