'Golden age' of coal draws to a close

Cleaner sources of electricity will develop rapidly in the coming years, official predicts

PUBLISHED : Thursday, 18 April, 2013, 12:00am
UPDATED : Thursday, 18 April, 2013, 5:33am


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The mainland's coal-fired electricity market will suffer a "structural oversupply", as cheap but dirty-burning energy sources are increasingly marginalised, says a senior industry official.

Power generation executives need to be aware that the "golden decade" for coal-fired power ended in 2011, and that cleaner-burning natural gas will develop rapidly in the coming decade at the expense of coal, said Liu Xiangdong, deputy director-general of the China Electricity Council's department of planning and statistics.

The council represents the largest, primarily state-owned power generators, and Liu issued his warning at the annual Coaltrans China conference.

Competition from clean energy, including hydro, nuclear, wind, solar and biomass power, will keep the annual growth of coal-fired power - and thus demand for coal - well below 5 per cent in the coming decade, compared to 11 per cent in the previous one, he said.

"In the next three to five years, power-station coal demand will be weak. The years of long-term tight coal supply will not reappear," he said. "We will have a structural over-supply of coal-fired power. The main driver for coal demand and price will no longer be total power demand, but rather natural gas development policy and rainfall patterns for hydro power."

He forecast that incremental power station coal consumption would not exceed 100 million tonnes annually in the next three years.

About two-thirds of new demand will come from the mainland's rapidly-industrialising western and northern regions, and the rest from its more developed coastal and central areas.

Forecast total demand for coal in 2013 is 2.05 billion tonnes - between 40 million and 70 million tonnes, or 2 per cent to 3.5 per cent, higher than last year.

Last year's incremental demand was close to zero as ample rainfall saw more cost-competitive hydro power grab market share from coal-fired power.

In 2010 and 2011, power-station coal demand grew by more than 200 million tonnes due to low hydro power output amid the worst droughts in decades.

"Going forward, as government policies favour clean-energy consumption, the big picture is that coal-fired power will be at the bottom of the priority list for power dispatch by power grids," Liu said.

Amid growing concerns about air pollution, the Ministry of Environmental Protection imposed unspecified "special emission limits" on new coal-fired power projects from March 1.