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China Allows More Wind and Solar Waste to Maintain Growth

China this week released policy updates for the energy sector that would allow wind and solar generators in “resource-rich areas” to curtail twice what they can curtail now in order to keep the low-carbon energy ball rolling.

Curtailment is a term used for those periods during the day when wind or solar electricity output is so high that it cannot be fed into the grid to avoid overloading it. Instead, installations are switched off, essentially wasting the electricity produced.

Until recently, the limit on how much generators could curtail was 5% of their output. Now, this has been raised to 10% in those resource-rich areas, Bloomberg reported, citing the Chinese state. As a result, companies would have more incentive to keep building solar and wind installations.

According to Macquarie Capital, the legislative change could see additions of 30 GW in new solar capacity this year, the report said. On the other hand, according to some analysts, the changes could also lower the profits of wind and solar generators further. There is already significant strain on bottom lines because of the intensive competition in the sector and the new rule will only intensify this further.

In addition to higher curtailment limits, Beijing also announced measures aimed at encouraging the construction of more battery storage and new transmission lines so more of the wind and solar output can be captured and fed into the grid where possible. Yet the measures also include stricter approval processes for new manufacturing capacity in the low-carbon energy space as a way of curbing runaway competition that has pressured profits.

China plans to use wind, solar, and battery storage in its efforts to reduce per-capita energy intensity and carbon dioxide emissions over the long term. Energy intensity is planned to be reduced by 2.5% this year while CO2 emissions should fall by 3.9% if all goes according to plan.

By Irina Slav for Oilprice.com

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