China on Track to Install 230 GW of Solar and Wind Capacity in 2023
Wind and solar project investment is likely to touch $140 billion this year
China is on track to install a record-breaking 230 GW of wind and solar capacity in 2023, more than twice as many installations as in the U.S. and Europe, research firm Wood Mackenzie has said in a report.
Wind and solar project investment for China is expected to reach $140 billion by 2023, according to the ‘How China Became the Global Renewables Leader’ report.
China removed its preferential feed-in tariffs for renewable energy projects in 2022 as the price for wind and solar fell, saving the government hundreds of dollars.
Nearly $455 million has been budgeted for grid investment from 2021-2025, which is 60% more than the previous decade. This includes long-distance transmission lines over 1,000 km long, which have enabled the development of more than 100 GW of renewable energy in inland China.
Grid-connected energy storage has seen China emerge as a leader, with capacity expected to double from 2020 to 67 GW in 2023 and 300 GW in 2030.
Other government initiatives target grid flexibility. China has been criticized for a pipeline of over 200 GW of coal plants under development, but new policies have also led to the creation of a fleet of more than 100 GW of flexible plants that burn less coal and are designed to ramp up to backup intermittent renewables.
China has also released new policies on the demand side, such as higher peak pricing and setting targets for 50-80 GW of Demand Side Management or “virtual power plants” by 2025, the report said.
Coal’s proportion in electricity production has steadily declined, having dropped by 10% over the previous five years to 55%. Nuclear power accounted for most of the remaining reduction, with renewable energy making about 80% of the total.
Low solar and wind curtailment rates, which reached 2% and 4% in 2022, have aided the growth of renewable energy sources. This greatly improves project economics compared to the curtailment of over 10% experienced before 2020.
Declining interest rates have increased falling costs in China, low energy costs, fierce competition among local suppliers, and government support for manufacturing and, research and development.
Alex Whitworth, Vice President and head of Asia Pacific Power and Renewables research at Wood Mackenzie, said: “While other markets are moderating renewables targets, China has pushed up its 2025 wind and solar outlook by 43% or 380 GW in just a few years.”
“China’s end-user power prices are less than half those in Europe or Australia, and this supports a strong competitive edge in global trade. The China power market is now larger than that of Europe and the US combined, so if it can succeed in transitioning to a high share of intermittent renewables while maintaining stable prices, that would be a historic achievement,” Whitworth added.