,China

What can mitigate decarbonisation risks faced by China’s power sector?

Analysts said the sector will face risks in the next 1-2 years of decarbonisation.

Government support will be essential in lightening the burden of China's coal power sector as the country pushes to reach peak carbon emissions by 2030 and carbon neutrality by 2060.

From 2021 to 2025, the government aims to reduce carbon emission per unit of gross domestic product by 18% and energy consumption per unit of geometric dilution of precision by 13%.

The state also plans to increase the share of non-fossil fuels in the energy mix to 25% by 2030 from 15% in 2020.

These plans, according to Moody’s, could present a more difficult path for China beyond 2030, particularly in the coal power sector.

The sector, which accounted for about 55% of China’s carbon emissions, will be exposed to several risks in the next one to two years of decarbonisation like facing more leverage pressure from higher renewables capacity expansion.

Renewables capacity reached historical highs of about 120 gigawatts (GW) in 2020, according to the firm.

Though it is expected to be lower than the 2020 levels in 2021 to 2022, the renewables capacity is expected to be substantially higher than average levels in 2016 to 2019 “to achieve the government’s 2030 renewables capacity target of over 1,200 GW.”

Coal power will also start to lose its market shares to renewables but not in the next 12 to 18 months, Moody’s said.

“The impact on generators will largely be manageable in the next one to two years, mainly driven by strong power demand,” the firm said.

These risks, however, will be offset by several factors, mainly by strong government support.

Since the vast majority of China’s generation capacity is state-owned, the government has more “oversight to smoothen the decarbonisation progress."

Moody’s said they expect government-owned power generators to continue receiving support from the state due to the following reasons:

  1. The carbon transition will be unprecedented in the power sector’s history.
  2. The power sector will remain important in the future as electricity’s contribution to China's primary energy consumption mix will significantly increase, and;
  3. The power sector will carry lion’s share of the responsibility on renewables expansion, the scale of which will be significantly larger than historical levels.  

Reinforcement from the government will likewise support power generators' credit quality beyond 2030.

Other factors that will lighten the sector's burden from decarbonisation include emerging funding channels and technology development.

Join Asian Power community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

The contract is in line with Keppel's Vision 2030 for sustainability.
Advanced digital solutions can cut China’s LCoE by up to 12%, reports said.
Under the bill, the Singapore regulator will be allowed to be a market player.
The NFE project is the only significant LNG investment recorded amidst the clean energy transition.
The deadline for submission of proposals is on 1 April 2022.
Grid stability and commercial viability are key in the clean energy transition.
Currently, renewables comprise 21% of India’s total power generation.
Analysts said the sector will face risks in the next 1-2 years of decarbonisation.
Following the launch of SolarShare, the company faced contractor issues in Singapore.
The Grid Digital Twin is being developed in anticipation of the increasing electrification complexities.
With such a price, the 36.4 Gt of carbon emissions in 2019 would amount to about 4% of the world GDP.
SG's membership in the PPCA reflects its efforts to phase out unabated coal.
The ETM Southeast Asia partnership is the first of its kind in Asia and the Pacific.
Over 50 companies were awarded in this year’s Oscars of the power industry.