February 14, 2024 (MLN): China is set to reach its 2030 wind and solar capacity target of 1.2 terawatts (TW) six years early, with installed capacity already reaching 1.1TW by end-2023, according to Fitch Ratings.
The China Electricity Council forecasts a further 260 gigawatts (GW) of new installations in 2024. Such large newly installed capacity may bring challenges to utilization and the grid’s ability to maintain a stable power supply.
Wind and solar installations reached 130GW in 4Q23, exceeding the previous peak full-year installations of 125GW in 2022.
Fitch expects mid-single-digit power consumption growth in 2024, against 6.7% growth in 2023, driven by our expectation of 4.6% GDP growth and a higher electrification rate.
Switching to green power from fossil fuels forms part of the energy transition plan for many energy-intensive sectors in China, with the government announcing several supportive policies to boost the purchase of green power.
This challenges the power system to adapt to a higher share of output from intermittent renewable power through increased grid investments and power storage capacity.
However, grid construction takes time and power storage capacity as a percentage of renewable capacity remains low. This means that thermal power will play an important role in stabilizing the power system in the transition period.
The entity further forecasts thermal capacity to continue to rise to meet the rising peak power load, while utilization is likely to decline to give way to renewable power.
The government has introduced a capacity tariff to facilitate this transition while ensuring stable profit for thermal power.
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Posted on:2024-02-14T11:03:05+05:00
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