HOME > News

China Achieves 50% Reduction in Power Prices Through Robust Renewables Integration, Surpassing US and Europe

published: 2023-11-29 11:44

In a recent report, Wood Mackenzie predicts that China is poised to achieve remarkable milestones in 2023, with the potential installation of 230 GW in photovoltaic (PV) and wind capacity, along with an estimated export of over 200 GW in solar panels. Notably, China is steering clear of the high curtailment issues faced by Europe and the United States.

The substantial surge in solar module production capacity and PV installations within China plays a pivotal role in maintaining comparatively low and stable power prices, distinguishing it from the challenges experienced in Europe and the United States. These Western counterparts grapple with escalating PV curtailment and surging inflation, while China's energy transition is described by Wood Mackenzie as a virtuous circle. This trajectory is marked by diminishing interest rates, affordable energy costs, and intense price competition.

According to analyst Sharon Feng, China's rapid strides in solar manufacturing and the reduction of solar module costs can be attributed to its expansive domestic scale and robust export growth. This has allowed China to effectively navigate and overcome challenges related to cost inflation observed in other global markets.

“The power prices for end-users in China are now less than half of those in Europe or Australia, providing a formidable competitive advantage in the global trade arena,” noted Alex Whitworth, co-author of the report. “With a power market larger than Europe and the US combined, China's potential historic achievement lies in successfully transitioning to a high share of intermittent renewables while maintaining stable prices.”

In 2022, curtailment in China for photovoltaic (PV) and wind sources dropped to 4%, a significant decrease from the over 10% observed before 2020. Analysts anticipate a potential uptick in curtailment next year but stress that it will remain at manageable levels.

Projections for this year indicate that China will install around 230 GW of new PV and wind capacity, surpassing Europe's 75 GW and the United States' 40 GW. Additionally, the country is expected to reach a cumulative grid-connected energy storage capacity of 67 GW in 2023, with ambitious plans to expand to 300 GW by 2030.

The report highlights the crucial role of long-distance transmission lines spanning over 1,000 km, unlocking the potential for over 100 GW of renewable energy development in inland China. It also underscores the design of approximately 100 GW of flexible plants aimed at providing robust support for renewable energy backup.

"China's recent investments in renewables and the corresponding support infrastructure have surpassed funding directed towards coal power by a remarkable 5-to-1 ratio," shared Whitworth. “The proportion of coal in power generation has consistently dwindled, experiencing a 10-percentage-point drop over the last five years to around 55% today. Notably, roughly 80% of this reduction has been seamlessly replaced by renewables, with the remaining portion predominantly filled by nuclear power.”

Source from PV Magazine

announcements add announcements     mail print