Mapping China Renewables Curtailment and Coal Risks

The world’s largest power system will face serious challenges in the next few years. In the previous decade, spurred by rapid power demand growth, generous subsidies, and regional industrial competition, China over invested in new generation capacity. By the end of 2016, the national power market was oversupplied by 35%.

China’s power generators, both renewable and coal, experience increasing competition for dispatch. Renewable power generators face the worst curtailment rates in the world, with the national average curtailment ratio in 2016 at 17% for wind and 10% for solar. Coal power generators are entering an unprecedented period of uncertainty as regulators tighten environmental regulations and cancel new projects.

With the support of ClimateWorks Foundation, Bloomberg New Energy Finance has created the China Renewable Curtailment and Coal Stranded Assets Risk Map to provide forward-looking transparency on the metrics that are used by central regulators governing this market transformation.

Read some of the key findings below and click here to download the full report and excel tool.

Model user guide – risk heatmap

Source: Bloomberg New Energy Finance.

Our data-driven tool portrays cross-sector, province-level dynamics of China’s power sector challenges during the 13th five-year plan period (2016-20).  The resulting map provides insights into China’s challenge in managing its power generation system in the next few years, addressing questions such as:

  • Will low-carbon renewable generation achieve priority dispatch over coal-fired power, as the market moves towards an economic-driven merit order? Or will wind and solar assets face economic hardship as curtailment continues even as subsidies decline?
  • As the penetration of renewable energy further increases and a more liberalized power market design is implemented, what will the impact be on China’s coal-fired power assets? What is the risk for economic impairment on these assets?

Our key findings include:

1. Curtailment to decline nationally, but it may emerge in southern provinces.
2. Highest coal risk regions see little improvement in conditions.
3. Long distance transmission and power market reforms crucial for reducing renewable curtailment risk.
4. There are no provinces in China where new coal generation capacity is needed.
5. China still building over 50GW of wind and solar in high curtailment risk regions.
6. China faces a potential hit of $237 billion from at-risk coal assets.

Click here to download the full report.

About BloombergNEF

BloombergNEF (BNEF) is a strategic research provider covering global commodity markets and the disruptive technologies driving the transition to a low-carbon economy. Our expert coverage assesses pathways for the power, transport, industry, buildings and agriculture sectors to adapt to the energy transition. We help commodity trading, corporate strategy, finance and policy professionals navigate change and generate opportunities.
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