Renewable Electricity Generation In Asia – A Realistic Assessment

China accounts for more than half of global coal consumption, with the majority of that consumption within an electricity-generating sector that produces 73% of its power from coal. In 2015, China’s coal production was 1.83 billion tons, compared to 455 million tons in the United States. China’s recent focus on non-fossil energy sources has led to a short-term peaking of coal usage, but its current 5-year plan envisages a 19% increase in coal generation capacity[1]. Renewables alone simply cannot provide the amounts of additional electricity production required to support the country’s rapid economic growth. This additional coal usage will be exacerbated by the rapid growth in countries such as India (407 tons) and Indonesia (147 tons) – both of which are rapidly expanding coal usage as they drive industrialization (India’s coal-fired generation capacity will have more than doubled in the decade up to 2022)[2]. Japan’s reduction in fossil fuel usage will only offset a small part of these increases. The most recent draft plans from India may produce a peak in fossil fuel usage by the mid to late 2020’s, but no such plans exist for Indonesia.

The situation in Asia shows the problem facing the global electricity sector; as rich countries struggle to peak or reduce emissions, newly industrializing countries are rapidly increasing fossil fuel usage as they move through the energy intensive early stages of industrialization. If the latter are to raise the living standards of their population, the richer countries must both radically reduce emissions and provide much greater economic and technical support for renewable technology capacity increases in developing countries. The sheer scale of the countries within Asia, such as China (population 1.4 billion), India (1.3 billion), and Indonesia (255 million) exacerbates this issue – with just those three countries representing 40% of the world’s population. 

China (73% fossil fuels)

The rapid economic development of China over the past decades has been overwhelmingly powered through the utilization of the country’s extensive coal reserves. This pattern matches the development trajectory of most countries, with a first phase of industrialization driven by coal, that is then followed by an oil-driven phase as increasing incomes drive demand for individual transportation. In 2015, 73% of China’s electricity was provided by coal, 19.4% from hydroelectric plants, 2.9% from nuclear, and 4.7% from new renewables (predominantly wind and solar). China is the biggest global user of electricity. With only minimal demand growth in 2015, growth in non-fossil sources led to a reduction in coal usage and therefore CO2 emissions[3]. One caveat is that China has a history of significant upward revisions in previous years coal usage statistics[4], so it may be at least five years before the 2015 coal consumption numbers can be accurately known.

Within the electricity sector, China began a rapid build out of non-fossil fuel generation within the past few years. From being a serious laggard, China has moved to a position of being the largest implementer of renewable and nuclear capacity. In addition, an aggressive drive for energy efficiency has facilitated a relative decoupling of electricity demand growth from economic growth. Structural changes in the economy that will orient growth toward less energy intensive sectors will also help facilitate greater levels of energy efficiency. The combination of a rapid non-fossil build out and significant increases in energy efficiency may allow China to stabilize electricity sector emissions while maintaining lower, but still relatively rapid, economic growth. This will not occur before 2020 though, as the current five-year plan calls for a 19% increase in coal-fired generating capacity[5].

An advantage that China currently has over richer countries is that the predominance of non-fossil capacity will be to meet increased demand, rather than replacing current capacity. This removes the problem of capital write-offs as capacity is retired earlier than planned. Due to the large additions of new coal-fired capacity in the 2000-2020 period though, it may be faced with large-scale losses in later years as still relatively new coal-fired plants have to be shut down to reduce emissions. The very rapid implementation of large amounts of wind and solar capacity has caused grid integration issues. Since 2012 solar capacity has been increased seven-fold, and wind capacity has doubled. The integration issues have caused the Chinese government to recently reduce its 2020 targets for these sources. This mirrors the integration issues seen in some other countries that have rapidly expanded intermittent renewables, such as Germany. Even with these reductions though, solar capacity will double and wind increase by 50% by 2020[6].

The latest five-year plan (2015-2020) calls for an increase in coal-generation capacity from just over 900GW to 1100GW, and natural gas from 60GW to 110GW. By 2020 hydro capacity will be increased to 340GW, wind to 210GW, solar to 110GW, nuclear will nearly double to 58GW[7]. Fossil fuel capacity will be 63% of capacity, and a somewhat higher share of generation. This will mean that China’s emissions will not peak as early as some commentators have suggested, with an implied increase of 2% per year between 2015 and 2020, although they may still outperform their commitment to a 2030 emission peak[8].

India (82% fossil fuels)

The country has a growing population commensurate with that of China (i.e. 1/7th of global population), with a low level of per-capita income and level of industrialization. Therefore, there is a huge growth potential in electricity usage as the country moves through the energy-intensive early stages of industrialization, with large sections of the population still having no access to electricity. India’s current per capita electricity usage is below that of China’s in 2000, even after a doubling of electricity output since the turn of the century. It is forecast that India’s electricity generation will more than treble by 2040, equaling that of the European Union by 2035. Even then India’s per capita electricity usage will be well below the world average[9].

India’s increasing electricity demand has been met predominantly with increases in coal-fired generating capacity, which supplies over 71% of electricity. Natural gas supplies about another 9%, oil 2%, hydro 12%, nuclear 3%, and the balance is supplied by other renewables[10]. During the 2012-2017 plan period, new solar and wind capacity at about 32GW will be only a third of new coal and natural gas capacity at about 88GW and 6GW respectively, with the latter two having a much higher possible capacity utilization rate. During the period 2017-2022, coal capacity of 50GW and natural gas capacity of 4.3GW will be commissioned, against 15GW of hydro, 2.8GW of nuclear and 60GW of wind and solar. Considering probable load factors, this may result in an equal amount of additional electricity generating capability from fossil fuel and clean energy sources.

Coal capacity would then be 249GW, having more than doubled in 10 years, and natural gas 30GW. No new fossil-fired capacity would be required in the following five years (2022-2027), as increases in fossil-fuel generation can be met by the higher utilization of the in place fleet. During that period 50GW of solar, 40GW of wind, 37GW hydro (including imports), and 7GW of biomass capacity would be added. The composition of electricity generating capacity would then be substantially changed, with fossil fuel sources being reduced to 44% of capacity, 11% from hydro, 43% from other renewables and 2% from nuclear. Given differing load factors, coal and natural gas may still supply more than half of electricity production. In this plan, electricity sector carbon emissions could peak in the mid to late 2020’s at a level still much higher than the present one.

The above numbers are from a draft of India’s National Energy Plan[11] and are open to revision before the final version. One risk is that hydro capacity cannot be built out and/or drought reduces expected capacity utilization. This would then result in additions of fossil fuel generating capacity that would maintain the share of fossil fuels in the electricity supply mix.

Japan (82% fossil fuels)

Japan is globally the fifth largest user of electricity. The shutdown of the Japanese nuclear sector post-Fukushima led to a significant increase in the use of fossil fuels, especially natural gas, within the electricity-generating sector. Of electricity generation, 39% is from natural gas, 34% from coal, 9% from oil, 8.4% from hydroelectricity, 4% from biofuels and waste, 3.6% from solar, 1% from nuclear, and 0.5% from wind. Policy support for renewables was put in place, generating rapid growth in solar installations (~1000% 2010-15) together with somewhat slower growth in wind (~25%)[12].

The combination of slow economic growth, continued government support to accelerate energy efficiency, and ongoing increases in renewable generation should allow Japan to reduce the usage of fossil fuel generated electricity. Government plans to have 20%-22% of electricity generated from the nuclear fleet by 2030 will greatly add to this reduction. Given that Japan imports the vast majority of its fossil fuel supplies, the government has the added imperatives of energy security and an increased trade deficit for a reduction in fossil fuel usage.

Indonesia (87% fossil fuels)

Coal provides 51% of the Indonesian electricity supply, natural gas 27%, diesel 9%, hydro 8%, and geothermal 5%. As with India, significant portions of the population do not have access to electricity, and there is an enormous potential for demand increases. Electricity demand is forecast to outstrip relatively fast economic growth, with coal and natural gas continuing to dominate. With much of the coal production coming from vast open pit mines situated in the rain forest, the climate impact will be increased through the release of carbon from the forest biomass and the removal of that biomass as a future carbon sink.

Indonesia is a significant coal exporter and therefore usage of these reserves to support higher-value economic activity would be in the country’s interests. There are some concerns though that the country may deplete its economically viable reserves in the 2030’s[13]. It also has significant under-utilized reserves of conventional natural gas, which may be used to replace imported Liquefied Natural Gas.

References

[1] Aibing Guo (2016), China Says It’s Going to Use More Coal, With Capacity Set to Grow 19%, Bloomberg. Accessible at https://www.bloomberg.com/news/articles/2016-11-07/china-coal-power-generation-capacity-may-rise-19-in-5-year-plan

[2] Stephen Lee (2016), Global Coal Consumption Rising Despite Deep U.S. Cuts, Bloomberg. Accessible at https://www.bna.com/global-coal-consumption-n73014447404/

[3] Energy Post (2016), China’s electricity mix: changing so fast that CO2 emissions may have peaked, Energy Post. Accessible at http://energypost.eu/chinas-electricity-mix-changing-fast-co2-emissions-may-peaked/#comments

[4] Chris Buckley (2015), China Burns Much More Coal Than Reported, Complicating Climate Talks, The New York Times. Accessible at http://www.nytimes.com/2015/11/04/world/asia/china-burns-much-more-coal-than-reported-complicating-climate-talks.html

[5] Aibing Guo (2016), China Says It’s Going to Use More Coal, With Capacity Set to Grow 19%, Bloomberg. Accessible at https://www.bloomberg.com/news/articles/2016-11-07/china-coal-power-generation-capacity-may-rise-19-in-5-year-plan

[6] Bloomberg News (2016), China Scales Back Solar, Wind Ambitions as Renewables Cool, Bloomberg. Accessible at https://www.bloomberg.com/news/articles/2016-11-08/china-scales-back-solar-wind-ambitions-as-renewables-boom-cools

[7] Chinese Bureau of Energy (2016), Energy Bureau on Power Development Thirteenth Plan, China Bureau of Energy. Accessible at http://www.gov.cn/xinwen/2016-11/07/content_5129638.htm

[8] Carbon Tracker (2016), China’s 13th Five Year Plan offers no hope for coal markets, further suppressing CO2 emissions, Carbon Tracker. Accessible at http://www.carbontracker.org/china-five-year-plan-coal-co2-emissions-renewables/

[9] International Energy Agency (2016), India Energy Outlook, IEA. Accessible at https://www.iea.org/publication s/freepublications/publication/IndiaEnergyOutlook_WEO2015.pdf

[10] U.S. Energy Information Agency (2016), International Energy Outlook 2016, US EIA. Accessible at https://www.eia.gov/outlooks/ieo/electricity.cfm

[11] Government of India (2016), Draft National Energy Plan, Government of India. Accessible at http://www.cea.nic.in/reports/committee/nep/nep_dec.pdf

[12] International Energy Agency (2016), Energy Policies of IEA Countries: Japan, IEA. Accessible at https://www.iea.org/publications/freepublications/publication/EnergyPoliciesofIEACountriesJapan2016.pdf

[13] Price Waterhouse Coopers (2016), Indonesia could deplete coal reserves by 2033 – PwC, Reuters. Accessible at http://www.reuters.com/article/indonesia-coal-idUSL4N16F4C4

 

 

 

 

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