Climate Change: China's new wind and solar capacity makes up over half the power industry total as nation seeks to cut carbon footprint

Wind and solar farms accounted for more than half of the new power capacity that came online in mainland China last year, official figures show.

It was the fifth consecutive year that the proportion of newly-installed wind and solar capacity came in above 50 per cent, as renewable energy continues to play a key role in helping Beijing achieve its climate goals.

The nation added a record 54.9 gigawatts of solar farms last year, 14 per cent more than in 2020, the National Energy Administration said in a statement on Wednesday.

Wind power capacity growth, however, dropped by a third to 47.6GW last year after a record 71.7GW was installed in 2020, as tariff subsidies for onshore wind farms – the mainstay of the sector – were phased out.

The combined wind and solar farms installation volume of 102.5GW last year accounted for 58 per cent of the power industry’s total capacity addition, compared to 63 per cent in 2020 and between 51 and 55 per cent from 2017 to 2019.

The renewable energy industry has kept up strong capacity installation, even as Beijing has ordered the coal power industries to step up production in the past few months to meet energy demand amid temporary shortages and spiralling coal prices.

“China may have resorted to stabilising coal supply in the short term, and balancing competing energy goals is still challenging, but it does not mean it is diverting away from its long-term climate change goals,” said Miaoru Huang, a research director at energy and commodities consultancy Wood Mackenzie.

She predicted the nation will add close to 120GW of new solar and wind capacity in 2022, up 20 per cent from last year.

Beijing has set a goal of reaching total wind and solar capacity of 1,200GW by 2030, almost double the 635GW in place at the end of last year. It also aims to lift the contribution of non-fossil fuels to China’s total energy consumption from 20 per cent in 2020 to 25 per cent by 2030.

Generating more low-carbon energy and exercising strict control over fossil fuel capacity are at the core of Beijing’s strategy to decarbonise its economy. Last year China emitted the world’s highest amount of carbon dioxide, the gas blamed for global warming and climate change.

Although newly installed wind and solar farms made up over half the power capacity added in the past five years, their actual contribution to national power output has been relatively modest because their utilisation rate is typically about half that of fossil fuel power plants.

Total wind and solar energy output amounted to only 9.5 per cent of total power production in 2020, even though their combined installed capacity accounted for 18.8 per cent of the total. Coal and natural gas-fired power made up two thirds of the total.

The rapid installation growth has been helped by the nation’s enormous capacity to produce wind and solar equipment.

“China’s renewable power generation costs remain competitive globally due to large domestic production capacity from the supply chain and high demand for renewables,” said Wood Mackenzie principal economist Yanting Zhou.

Beijing is expected to publish detailed guidance later this year for the development of the various segments of the energy industry.

“Following the conclusion of [the global climate conference] COP26, market participants are expecting quantified guidance from the five-year plans, such as what level of incremental coal demand and coal-fired power capacity are allowed, potential acceleration of renewables targets and the desired share of gas in the energy mix,” Zhou said.