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China will invest some 160 billion yuan (US$23.5 billion) in an offshore wind power project that will have an installed capacity of more than 10GW Chinese state news agency Xinhua reported, citing the local government of Jiangsu where the project will be located.
Wind power, according to Xinhua, is the third-largest source of energy in the country after coal and hydropower. The country is already the world leader in wind power with 187 GW in capacity in early 2018. The plan is to increase this to 210 GW by the end of 2020.
Renewable energy as a whole and wind energy specifically is a top priority for China as it fights one of the worst air pollution levels in the world while subject to an uncomfortably high degree of reliance on energy imports, namely oil and gas. At the same time, it is one of the biggest—if not the single biggest—driver of global energy demand as its middle class grows fast and with it, energy demand.
So it makes sense that a country in this position would try to make the best of the renewable energy opportunities it has. In 2017, China’s share in global energy demand was estimated to reach 28 percent in 2035, from 23 percent in 2017. In that same year, Beijing announced it will invest US$360 billion in renewable energy by 2020 and cancel plans for the construction of 85 new coal-powered plants.
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The renewables bet, however, is not without challenges. One of these are the generous subsidies in solar that prompted a boom in this energy industry segment. The boom was so intense, Beijing had to roll back some of the subsidies as they threatened to cost it a lot more than originally expected. So earlier this year the authorities said they would only approve new solar projects if their cost is on par with coal capacity.
In wind and solar both, China’s renewables industry faces another problem: so-called curtailment or the waste of electricity produced by wind and solar farms because the grid can’t take it all. To solve that, China is building supergrids.
Last year, China generated 1.87 trillion kWh of electricity from renewable sources and boasts rising utilization rates despite the persistent challenges.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
This is good news, and hopefully we will see the unprecedented reduction in offshore wind costs continue. I think $1 billion per GW is very likely by 2030, and with much longer operational lives, we should start to see the MWh price go below $30-40.
Anytime around then (and with an effective carbon price), domestic hydrogen production should be replacing SMR hydrogen and natural gas to an extent.