Power shift: China to boost clean energy investment

China dominated the world last year in clean energy investment, with total spending of US$89.5 billion, according to Bloomberg New Energy Finance. That’s a 32 per cent increase over 2013. The spending boom represents the country’s attempt to simultaneously mitigate its environmental impact while meeting its growing energy demands.

Spending is expected to further increase on the heels of last year’s climate deal with the US, in which China agreed to derive at least 20 per cent of its electricity from renewable sources by 2030.

To get there, the country will have to add 1.3 gigawatts of renewable energy each week for the next 15 years. To put that number in perspective, an average-sized coal plant produces about 600 megawatts of power.

Because of the emissions created by coal plants, a key question is when China’s use of coal as an energy source will peak. Ross Garnaut, professor of economics at Australian National University, predicts that peak coal use will come as soon as next year. This will happen, he says, because improved energy efficiency will combine with an increase in renewable power to mitigate the need for coal.

“Non-coal sources of energy account for virtually all the growth in electricity demand,” Garnaut says.

Indeed, renewable energy sources accounted for 58 per cent of new electrical capacity in China year-on-year through the first half of 2014. Hydroelectric and wind power led the way, accounting for 30 per cent and 14 per cent of total growth respectively, according to China’s National Energy Agency.

While new coal plants still captured a third of that growth, that figure represents long-planned plants that are not likely to be fully utilised, given that their marginal costs are relatively high. After new plants work their way through the pipeline into next year, China will likely begin to retire more coal power than it brings online from 2016.