China State Grid Corp will spend about 400 billion yuan this year on its electricity networks as the country, which last month reached a deal with the United States to curtail fossil fuels, copes with an unprecedented influx of clean energy and higher demand.
Spending would need to be maintained at current levels for the next five years to accommodate higher electricity consumption and contributions from new energy sources, said Zhang Zhengling, a spokesman for the mainland’s biggest power distributor.
The spending throws a spotlight on Beijing’s challenge to get electricity from where it is generated to where it is needed. Already, about one in every 10 of the country’s wind turbines are sitting idle because of inadequate transmission capacity.
The International Energy Agency estimates the mainland will need to spend more than US$4 trillion until 2040 to overhaul the way it transmits and distributes electricity.
“Grid investment is mainly driven by government policies,” said Shi Yan, an analyst at UOB Kay Hian. “[The mainland is trying to] upgrade the networks with ultra-high-voltage and smarter technology.”
The mainland’s annual energy consumption surged 51 per cent from 2008 to last year and was expected to peak between 2035 and 2040, said a report earlier this year from Climatescope, a research project whose partners include Bloomberg New Energy Finance and Britain’s Department for International Development.
Under last month’s agreement reached with the US, China will be required by 2030 to install as much as 1,000 GW of new zero-emissions energy, exceeding the amount of coal-fired power generation the country has today.
Absorbing and transmitting that “will be a huge challenge for us”, Zhang said.
The mainland would “see a larger scale of clean-energy development between 2020 and 2030” as the proportion of coal power in its electricity mix fell and energy demand grew, he said, adding China State Grid must hasten its use of the most advanced ultra-high-voltage transmission technology.
China State Grid currently connects more than 100 GW of wind and solar capacity using its networks, an amount exceeding the total renewable capacity Germany had at the end of last year.
Zhang said the nation would need at least 400 GW of hydro power, 500 GW of wind power and 300 GW of solar power by 2030. The problem is distance.
Much of the newly added hydroelectric capacity is in the southwest and coal is generated in the north. Consumption is heaviest in the east, south and areas around Beijing.
“[China’s] energy consumption demand will continue to grow” at a pace faster than developed countries, Zhang said. “We have large-scale, long-distance energy needs.”
The push to connect renewables and curb air pollution meant spending about 180 billion yuan on eight ultra-high-voltage lines by 2017, he said, adding the company had proposed to the government that 13 more such networks be built.
The technology could “deliver larger power capacity over a long distance with higher voltage but less transmission loss”, he said.