Liberalising China’s electricity market will help coal power giant Datang transition to clean energy, chairman says
- Electricity market reform will allow Datang International’s coal plants to wind down output and increase renewable energy production, chairman Liang Yongpan says
- Datang’s carbon dioxide emissions fell 4.4 per cent to 192 million tonnes last year, after declining 13.9 per cent in 2021
Market reform will allow Datang’s coal plants to wind down output and increase renewable energy production, thereby enabling the company to charge higher prices for its coal power and make the transition viable, said chairman Liang Yongpan. It will also allow the company to earn more revenue from the sale of carbon credits, he added.
“For a coal power generator like Datang International, the biggest challenge and opportunity lie in clean energy transition,” he told a briefing on Monday. “The proliferation of market-based pricing is a matter of when, not if. We will see more interprovincial power sales and spot trading at favourable prices at times of peak demand.”
The listed flagship of China Datang Group, one of the nation’s five state-owned power generation groups, operates the world’s largest coal plant in Tuoketuo, Inner Mongolia, with an installed capacity of 6.7 gigawatts.
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Last year, it was granted approval to build 1.3GW of wind farms and 0.7GW of solar farms in the autonomous region in northern China, Liang said.
Although Datang International was burdened with coal power assets that will be phased out in the coming decades, Liang said it was well-positioned to replace them with solar and wind farms given Tuoketuo’s proximity to power grids designed to dispatch renewable energy to consumption centres. Grid access is a key barrier for new renewable projects.
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“We will also transform Tuoketuo into a base for clean energy, integrating solar, wind, coal power generation, heat production and energy storage,” he added. “If we can use 40 to 50 per cent of the coal generation capacity to generate heat in the winter, the coal consumption per unit of power output can fall 20 per cent.”
The company has a goal for carbon emission to peak by 2025, and to realise “integrated development” of wind, solar, hydro, coal and natural gas power, hydrogen and energy storage by 2035.
Last year, Datang International’s carbon dioxide emissions fell 4.4 per cent to 192 million tonnes, after a 13.9 per cent decline in 2021. It has 7.4GW of power plants under construction, comprising 4.2GW of wind and solar and 3.2GW of coal and natural gas.
Datang International increased the share of wind and solar production to 24.5 per cent of its total generation capacity at the end of last year from 23.5 per cent a year earlier. It has also expanded its fleet of plants using natural gas, which accounts for 8.5 per cent of overall capacity from 6.7 per cent a year earlier.
The company expects the price of coal to continue to soften this year as new mines are commissioned and policies that limited coal imports in previous years are eased, said finance director Zhao Wei.
While high coal costs caused Datang’s power and heat generation operation to book an operating loss of 1.84 billion yuan (US$267.1 million) last year, it narrowed the loss from 12.5 billion yuan in 2021.
Retrofitting existing coal-fired power plants can provide an “immediate solution” to make power generation flexible and cut emissions, according to a joint report published by the Centre for Research on Energy and Clean Air and International Society for Energy Transition Studies on Monday.
However, this will require market and regulatory reforms that will reward developers of energy projects that are both clean and flexible, the report said.
Coal plants retrofitting is a key interim solution, given cleaner alternatives such as pumped hydro plants, battery storage, green hydrogen and supply of stored power from electric vehicles batteries to the power grid are limited by long lead times, high costs or lack of suitable sites, the report said, citing findings from a survey of 38 Chinese experts.
