New Energy Challenges in China

New Energy Challenges in China

China is racing to develop new energy — including wind, solar, hydro, bioenergy and lithium batteries — as it seeks a fresh engine for economic growth.china new energy The sector has become a favorite of local authorities and investors seeking safe, politically correct projects to support their economies, as one major engine — property — has slowed down over the past year amid a regulatory crackdown in Beijing.

The country has a huge advantage in this sector, as it dominates the production of key renewable energy components such as steel and polysilicon.china new energy Its hefty subsidies and its position as the world’s largest consumer of raw materials have helped to fuel rapid development of green energy infrastructure.

But the pace of change is not without its risks, particularly in power generation.china new energy The government’s zeal for expansion of wind and solar power is being challenged by a need to ensure stability of electricity supplies despite growing capacity. Occasionally severe power shortages are taking their toll on business and the economy, as well as people’s quality of life.

To address these issues, the government recently released the 14th Five-Year Plan (FYP) on Renewable Energy Development (2021-2025), a policy blueprint for further accelerating the transition to clean energy.china new energy It calls for 50 percent of incremental energy consumption and electricity supply to be sourced from renewables, and sets an target for the capacity of wind and solar power generation at 1,200GW by 2030.

The goal of the new plan is to ensure a reliable power supply for all Chinese, while promoting industrial upgrading and rural revitalization.china new energy But securing guaranteed access to imported natural gas and coal, which make up much of China’s energy mix, will be crucial for meeting these targets. This is especially true because many of these sources are located in politically unstable countries or are shipped across narrow straits and contested waterways.

Yang Muyi, an expert with the state Development Research Centre on Renewable Energy, says the biggest challenge in meeting these goals is reconciling the need to ensure security of energy supply and building a modern energy system.china new energy He says the power governance in China lacks cross-regional coordination, so importing provinces can’t be sure that exporting provinces won’t hold back electricity for their own use. They may have to build their own power plants to ensure supplies, which can result in duplicate capacity.

Despite the challenges, this is still an industry to watch.china new energy In 2021, China saw investment in renewable energy surge by 45% to 1.4tn yuan ($21bn; +9%, comprising grids, EV charging points and railways). And even in the face of economic uncertainty, China’s new-energy sectors have continued to attract abundant investment capital. As a result, they could be the next big source of growth for the economy. But will they be able to fill the void left by real estate? The answer will likely depend on how quickly China can achieve its energy goals. Click through to find out more.