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Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

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China Outpaces Competition In Renewable Race

solar

China has a no-nonsense approach to pretty much everything. After its rapid growth as an industrial power, it is now employing this very same approach to deal with its consequences: the country is already the world’s top spender on solar power, and everything suggests Beijing plans to keep things this way.

After the completion in June of what could be the world’s biggest floating solar farm, now media report that during the first half of the year, Chinese companies installed 24 GW of solar capacity, of which 7 GW is distributed. That’s after last year China doubled its solar power capacity, adding almost 35 GW to a total 77.42 GW at the end of the year.

The capacity installed in the first half alone equals, Bloomberg notes, more than 50 percent of the total solar installed capacity in the U.S. as of the end of 2016. If the pace of expansion continues, this year will see another substantial increase, maintaining China’s spot as the world’s largest solar power market in terms of number of panels. Solar panel production, of course, is also set for a rise: 25 percent on an annual basis this year, to 60 GW.

Rising domestic demand for renewable power—spurred in no small measure by a government drive to shift to renewables—was the main reason behind the increase. Earlier this year, Beijing said it would splash US$361 billion on expanding the country’s renewable power capacity by 2020. Solar capacity was originally projected to reach 110 GW by 2020, but it seems the target will be hit much sooner: at the end of June 2017 capacity stood at 101.82 GW. Related: Why Oil Prices Aren’t Going Anywhere

By 2022, China should have 320 GW of wind and solar power capacity, along with 340 GW of hydropower. By 2030, China aims to generate a fifth of its energy from renewable sources.

And that’s not all. The installed capacity is also being utilized more efficiently. Earlier this year, the country’s National Energy Administration reported that power generation from PV plants went up by 80 percent between January and March. Also, in the first half just 7 percent of the total solar capacity was idle, down by 5 percentage points from the first half of 2016, Bloomberg notes, quoting NEA green energy official Xing Yiteng.

Yet this solar drive is not without its problems, the biggest of which seems to be wastage as a result of inadequate grid connections, or curtailment as it is also called. Reuters quotes Greenpeace as estimating the solar curtailment rate across the country went up by 50 percent during 2015 and 2016, with as much as 30 percent of solar power generated in two northwestern provinces, Gansu and Xinjiang, never reaching the grid. Related: Daily OPEC Oil Prices Now Public For The First Time Ever

Another challenge Beijing needs to overcome is a shortfall in renewable energy subsidies. Last year, this shortfall was around US$8.86 billion, and as the rate of capacity expansion accelerates, the chances are that the gap will only rise.

Despite these challenges, the long-term potential of solar power in China remains robust. International demand for solar capacity is also on the rise and will continue to rise for the observable future, which will certainly benefit Chinese solar panel producers, as will ever-falling production costs. All in all, the future is bright for the solar industry in China until it reaches the point of saturation, which, too, could happen sooner than previously expected.

By Irina Slav for Oilprice.com

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