Part 2. Has the development of clean energy really made electricity cheaper in China?

 

Clean energy power has the advantages of environmental protection and renewable, and it is also the primary trend of the world's energy transition (Gui & MacGill, 2018). However, at this stage, does clean energy bring cheaper usage costs? Will residents' electricity bills for using clean energy power be reduced? Are China's electricity prices up to the standards required by SDG7? The following content will use horizontal and vertical comparison methods to compare and analyze China's current clean energy tariffs with other major countries in the world to answer the above questions. 

As mentioned in the previous blog, traditional coal-fired thermal power is still the main source of electrical energy in China. With the country's rapid economic development in the last decade, the Chinese government still chooses to fast-track large thermal power projects in order to address the shortage of electricity supply (Hui et al., 2013).

Figure 3: The proportion of China's thermal power generation from 2004-2013
Source: (China Electricity Council, 2013)

Figure 4: China's thermal power generation capacity from 2004-2013 (unit: 100 million kWh)

Source: (China Electricity Council, 2013)

Figures 3 and 4 shows that during the ten years from 2004 to 2013, the proportion of thermal power generation in the country's total power generation declined slightly. However, the entire power generation of thermal power units still increased rapidly, from 1.8 trillion in 2004. As a result, KWh increased to 4.2 trillion kWh in 2013, an increase of 133%.

Figure 5: China's hydropower generation capacity from 2004 to 2013 (unit: 100 million kWh)

Source: (National Bureau of Statistics, 2020)

At present, China's large-scale clean energy application is hydropower, so that it will be introduced as a representative of clean energy. Similar to coal power generation is hydropower. There are many world-class rivers in China, and the terrain within the rivers has vast ups and downs, so China has wealthy hydropower resources. According to NBS's statistics (2020), the theoretical reserves of China's hydropower resources have reached 690 million kilowatts. The technically installed capacity is 540 million kilowatts, and the economically developable installed capacity has reached 448 million kilowatts, ranking first in the world. After nearly half a century of development, China is the world's largest country in terms of installed hydropower capacity and the country with the enormous scale under construction and the fastest growing speed. Figure 5 shows that China's hydropower industry has developed rapidly in the past ten years, with an average annual growth rate of close to 20%.

Due to the rich resources of coal and hydropower, the residential electricity prices of coal and hydropower are also cheap. The national average coal price is about 0.045 pounds per kilowatt-hour, while the cost of hydropower is even more affordable, about 0.027 pounds per kilowatt-hour (Hui et al., 2013). 

Figure 6: Average power generation cost (LCOE) trend in China

Source: (Finn-Foley & Dudley, 2020)

In contrast to the world, North America, where the photovoltaic power generation industry is mature, the electricity cost is about 0.036 pounds per kilowatt-hour, which is lower than the local coal power generation cost of 0.077 pounds per kilowatt-hour (Chen & Wemhoff, 2019). At present, 80% of Canada's electricity supply comes from clean energy, and the energy transition in the United States has also achieved phased results (Jordaan et al., 2017). In the UK, clean energy power generation accounts for 25%. The price is also lower than coal power generation (Nguyen, 2019): The wholesale price of wind power in the UK is about £0.05 per kilowatt-hour, while coal power generation is £0.13 per kilowatt-hour. However, due to the differences in prices in various countries, this comparison is only for reference. In general, the price of clean energy varies significantly in different countries due to their other geographical locations and energy reserves. Moreover, the countries mentioned above have found cheaper alternative clean energy sources compared to coal power generation.

While coal remains the basic method of generating electricity in China, hydroelectric power generation technology has matured and is less expensive than coal generation. In addition, the price of solar, wind, and other clean energy sources will fall further as other clean energy applications become more sophisticated in the future. Whether China will be able to reach SDGs7 will take time to answer.

Like to know more? Watch the video below:  

-Wenbo Ding

11, October, 2021

Reference

Chen, L., & Wemhoff, A. P. (2019). Economic and Environmental Analysis of US-Based Data Centers Containing Photovoltaic Power Generation. In 2019 18th IEEE Intersociety Conference on Thermal and Thermomechanical Phenomena in Electronic Systems (ITherm) (pp. 141-151). IEEE.

Finn-Foley, D. & Dudley, G. (2020). A deep dive into China's renewables landscape. Wood Mackenzie. [online] Available at: https://www.woodmac.com/our-expertise/focus/Power--Renewables/a-deep-dive-into-chinas-renewables-landscape/ (Accessed on 9th Oct 2020)

Gui, E. M., & MacGill, I. (2018). Typology of future clean energy communities: An exploratory structure, opportunities, and challenges. Energy research & social science, 35, 94-107.

Hui, J., Jingzhu, Z., Xiaoli, Z. and Chunyang, F. (2013). Quantitative analysis of environmental externalities of China's thermal power industry. Electric Power, 7 (46), pp. 126-132. 

Jordaan, S. M., Romo-Rabago, E., McLeary, R., Reidy, L., Nazari, J., & Herremans, I. M. (2017). The role of energy technology innovation in reducing greenhouse gas emissions: A case study of Canada. Renewable and Sustainable Energy Reviews, 78, 1397-1409.

NBS. (2020). Annual data of the National Bureau of Statistics (2013). [online] National Bureau of Statistics.

Available at: http://www.stats.gov.cn/ (Accessed on 7th Oct 2020)

Nguyen, T. A. (2019). Energy Storage Planning for Clean Energy Target (No. SAND2019-11047C). Sandia National Lab. (SNL-NM), Albuquerque, NM (United States). Available at:

https://www.osti.gov/servlets/purl/1642192 (Accessed on 7th Oct 2020)