Coal still accounted for nearly 60% of China's electricity supply in 2023: CEC

Coal still accounted for nearly 60% of China's electricity supply in 2023, indicating that record-high solar and wind capacity growths were yet to lead to a ramp up in power production, government-backed industrial association China Electricity Council (CEC) said in a report published Jan. 31.

China's total power generation capacity reached 2,920 GW in 2023, in which coal's share dropped to 39.9%, while the share of non-fossil fuels, namely nuclear and renewables, reached 53.9%, according to CEC's newly published report titled "2023-2024 National Power Supply and Demand Analysis and Forecast."

Coal still dominates the actual electricity supplies. In 2023, China's coal-fired electricity supply increased 6.1% year on year, driven mainly by the need to cope with hydropower shortage, CEC said.

In the first half of 2023, China's hydro electricity supply dropped by 22.9% on the year, impacted by insufficient storage in major reservoirs and continued low precipitation.

Another alert from CEC is the declining utilization rate of solar PV power plants.

In 2023, China added 216 GW of solar PV and 76 GW of wind generation capacities. Notably, the solar PV capacity increased by 55.2% year on year.

To put the number into context, China's solar capacity addition in 2023 exceeded most countries' total capacity additions in their entire history. For instance, total capacity additions were 157 GW in the US, 81 GW in India, 75 GW in Germany, and 15 GW in the UK for their entire history till 2023, S&P Global Commodity Insights data showed.

The average utilization hour for China's solar PV plants in2023was 1,286, down 54 hours year on year.

"Utilization hour" is the metric used by China to measure the utilization rate of generation units. It reflected the average full-capacity operating hours in a year for each type of generation unit. In comparison, the utilization hour for coal-fired units was 4,685 in 2023, up 92 hours year on year.

Conservative renewable forecasts

CEC forecast that China's solar PV installed capacity will reach 780 GW at the end of 2024, increasing 27.9% year on year, much below the 55.2% annual increase in 2023. Meanwhile, the forecasts showed that China's wind installed capacity will increase by 20.5%, on par with the increase in 2023.

The CEC expects China's renewable capacity growth to slow down in 2024. The association highlighted that getting renewable electricity consumed is challenging.

CEC estimated that China will add about 40 GW of coal-fired and 30 GW of other thermal generation capacities (including natural gas) in 2024 to provide sufficient power supplies and address renewables’ intermittency.

To ensure a healthy growth of China's renewable power sectors, CEC suggested that policymakers should accelerate power market reform, enabling more renewable electricity to be traded through market-based approaches and beyond provincial boundaries.

Meanwhile, CEC called for overhauling the power system to accommodate increasing renewable capacities, improving both flexibility and stability. Notably, CEC said the power transmission networks must be significantly expanded, especially connecting the renewable mega-bases in north and west China with the demand centers in populous east coastal regions.

China's cross-provincial power transmission volume reached 849.7 billion kilowatt-hours in 2023, up 9.7% year on year. A majority of the country's cross-provincial transmission volume is coal-fired electricity, while the transmission volume for renewables is mainly contributed by relatively stable hydropower.

For the mega-base projects to successfully complete, policymakers need to address increasing land and administrative costs and simplify procedures for project approvals, besides establishing transmission channels, CEC said.

TABLE: China's total generation capacities by fuel types

*Includes mainly natural gas, but also other thermal fuels like biomass

*Other non-fossil fuels refer to nuclear and hydropower.

Electricity consumption

China's total electricity consumption was 9.22 trillion kWh in 2023, up 6.7% year on year.

Electricity consumption by primary industry was up 11.5% year on year at 127.8 billion kWh, while that of secondary industry was up 6.5% at 6.07 trillion kWh and that of tertiary industry was up 12.2% at 1.67 trillion kWh.

The electricity consumption growth was significant in 2023 from the low base in 2022 amid pandemic-related controls and economic downturns.

Notably, China's electrical machinery and equipment manufacturing sector, petroleum and coal processing sector, accommodation and catering sector, and transportation sector saw the most significant electricity consumption growths, CEC said.

China's electricity consumption will reach 9.8 trillion kWh in 2024, a 6% year-on-year rise, CEC has forecast, adding that there's a possibility of power shortages during demand peaks in the summer and winter.