China's ambitious renewable energy investments.

China's war on pollution is driving the country to ambitious investments in renewable energy.  According to the EIA China invested $89 billion in renewables in 2014, a 31% rise from 2013.  As a reference, $89 billion is roughly 0.86% of GDP.  The breakneck renewable investment growth will continue over the next 5 years to reach emission and energy renewable usage goals.  

Key points on China's ambitious renewable energy investments:

  • China invested $89 billion in renewables in 2014, a 31% rise from the year before.
  • The most ambitious renewable push comes from solar energy.  The solar installation target of 17.8 GW for 2015 is 70% higher than 2014, requiring $29 billion in investment.
  • China's NDRC is aiming for 200 GW of wind capacity by 2020 from a total cumulative capacity of 115 GW capacity at the end of 2014, an average increase of 15% per year for the next 5 years.
  • Renewable expansion will require more transmission and grid improvements.  Electrical grid investment is expected to rise 24% this year to $68 billion.  But as of the end of March, according to the China National Energy Administration, grid investment so far this year has declined 8.6% from last year.
  • Both renewable investments and grid building are positive for copper demand this year.  Antaike is expecting a 9% increase in copper demand in China.  However, copper imports have fallen 11% so far this year from the last.  So, we should expect imports to pick up in the second half of this year.
  • Hydro power remains China's main go-to renewable, accounting for 8% of total energy at 230 GW.  Hydro power is expected to increase to 350 GW by 2020, over 10% a year on average. Environmental concerns and displacement difficulties may lower the potential growth rate of hydro.
  • Nuclear expansion slowed after Japan's Fukushima accident (as with many other countries), and Beijing is targeting 58 GW of capacity by 2020.

Coal burning is by far the biggest source of energy in China (see chart below) at 66% of the total energy output. Coal burning is also the main target of pollution-fighting and renewable replacement.  Solar and nuclear are less than 1% each by comparison.  The country has a long way to go to cut its reliance on coal.

Last year was the first time this century that coal output fell, with output declining 2.1% for the year.  China National Coal Association expects another decline of 2.5% this year as well.  Coal imports (by volume) also declined over 20% over the last year.

China Total Primary Energy Consumption by Fuel Type 2012

Source: EIA

Solar Power:

China has increasingly ambitious plans for solar expansion.  In 2015, Beijing is targeting 17.8 GW of solar installations, 70% more than the 10.5 GW of installations in 2014.  Here are some solar power developments:

  • 5.04 GW of installations have already been completed in Q1 2015.  This brings China's total cumulative installations to 33.12 GW.  This year already solar capacity has increased 18% in one quarter.
  • 2015 solar targets are expected to require a total investment of over $26 billion.
  • If built as a utility-scale plant, 17.8 GW of solar capacity would cover over 70 square miles of land.
  • Total global solar investment in 2014 amounted to $149.6 billion, and forecasted growth for 2015 is expected to be 30% higher than last year, according to IHS.
  • China is the largest market for solar in the world (see below).

Top Solar Markets 2015 as % to Total

Source: IHS

Wind Power:

  • China has the world's largest wind energy capacity installed, roughly 115 GW according to the China Wind Energy Association.  But, according to official statistics only 96 GW is connected to the grid.  
  • China has the largest wind energy capacity, but the US is the largest generator of wind power.
  • NDRC is aiming for 200 GW of wind capacity by 2020, an average increase of 15% per year.