CREO 2019 power sector outlook
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This document summarizes China's Renewable Energy Outlook 2019 report which models China's power sector transformation consistent with limiting global warming to below 2°C. The key findings are: - By 2050, renewable energy will supply 90% of China's power generation led by over 2600 GW of wind and 2800 GW of solar installed capacity. Electricity demand will double through electrification and efficiency gains. - To achieve this, China must rapidly increase wind and solar installations to over 500 GW between 2020-2025 while phasing out coal capacity. Flexibility measures like markets and storage are also needed to integrate high shares of variable renewables. - This Below 2°C scenario results in deep decar
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CREO 2019 power sector outlook
- 1. China Renewable Energy Outlook 2019 High proportion RE generation drives deep decarbonization of power sector Lars Møllenbach Bregnbæk Chief Modelling Expert China National Renewable Energy Centre 12.12.19 China Renewable Energy Outlook 2019Energ y R ese arc h Institute of Academ y of M acro econom ic R ese arc h/N DRC Chin a N ational Renewable E nerg y C entre
- 2. Electricity use doubled • Efficiency increased • Electrification • Hydrogen based on green electricity introduced End-use electricity demand in the Below 2°C Scenario 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 20182020 2025 2030 2035 2040 2045 2050 ElectricityConsumption(TWh) Agriculture Construction Industry Transport Buildings Hydrogen Production
- 3. Power supply transformation – Below 2°C Scenario 0 1000 2000 3000 4000 5000 6000 7000 8000 20182020 2025 2030 2035 2040 2045 2050 InstalledCapacity(GW) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20182020 2025 2030 2035 2040 2045 2050 REShare(%) PowerGeneration(TWh) Ocean Geothermal Bio Solar Wind Hydro Nuclear Natural gas Oil Coal Renewable share
- 4. Supply side transformation – Below 2°C Scenario Next steps of the transformation - 2025 • Solar and wind generation exceeds 21% by 2025 • Coal capacity is maintained below 1100 GW Next era achievements – 2035 • Rapid progress in power system decarbonization • 80% RE share and 82% non-fossil share The Beautiful China power system – 2050 • Wind and solar above 2600 and 2800 GW • 90% RE in the power mix 2020 2025 2035 2050 Total Capacity (GW) 2053 2717 5124 6730 Coal 1023 1037 730 445 Natural gas & oil 106 133 197 152 Nuclear 53 66 87 100 Total RE Capacity (GW) 870 1482 4110 6033 Hydro 347 386 455 533 Wind 242 507 1763 2636 Solar 246 536 1836 2803 Bio 35 51 54 55 Geothermal 0.06 0.12 0.60 5.00 Ocean 0.05 0.28 0.87 2.00 Fossil fuels(%) 55% 43% 18% 9% Non-fossil fuels(%) 45% 57% 82% 91% Renewable(%) 42% 55% 80% 90%
- 5. 0 50 100 150 200 250 300 350 400 2018 2020 2025 2035 2050 Averageelectricitycost(RMB/MWh) Fixed cost Variable cost w.o. fuel Fuel cost Transmission cost CO2 cost Wind and solar electricity is the cheapest energy source RE drives down average wholesale cost of electricity – including balancing. Long-term cost per kWh is lower in Below 2, despite higher CO2-price Below 2°C Stated Policies
- 6. Wind deployment Solar deployment 0 500 1000 1500 2000 2500 3000 2018 2020 2025 2030 2035 2040 2045 2050 InstalledCapacity(GW) Onshore Wind Distributed Wind Offshore Wind 0 500 1000 1500 2000 2500 3000 2018 2020 2025 2030 2035 2040 2045 2050 InstalledCapacity(GW) Central East South North Northeast Northwest 0 1000 2000 3000 2018 2020 2025 2030 2035 2040 2045 2050 InstalledCapacity(GW) Central East South North Northeast Northwest 0 1000 2000 3000 2018 2020 2025 2030 2035 2040 2045 2050 InstalledCapacity(GW) Utility-scale PV Distributed PV CSP
- 7. Timely development of flexibility • Our analyses show it is possible to integrate large shares of fluctuating power production from wind and solar • It requires incentives for flexible production from all types of power plants and flexible consumption • Introduction of power markets with dynamic power prices is crucial for the integration
- 8. 14th FYP Critical phase for RE power installations Add 53 GW wind and 58 GW solar per year • Removal of subsidies • New risk exposures • Carbon pricing to take effect • New deployment paradigms Post-subsidy support to underpin the RE market • RE Consumption guarantee • Strict control on coal plants • Reducing or eliminating non-technical costs • Develop flexibility • Subsidies remain for future RE & storage 0 200 400 600 800 14th FYP 15th FYP 16th FYP Solar Wind Wind and solar installations under five-year-plans Power market reform towards national market
- 9. Thank you for your attention
- 10. 1. RE promotion 2. Coal control 3. Energy efficiency measures 4. Power markets 5. Flexible power system 6. Efficient carbon control policy Energy transition drivers
- 11. Decarbonisation of power generation What drives the transition? • Least-cost modelling driven by CO2-price and CO2-cap (Below 2°C) • Short-term, significant effort needed to change direction – the ETS price signal will not be enough! • In medium-term, cost competitiveness of RE technologies enables decarbonization at low cost • Adding new coal power capacity should be avoided – will be stranded! Power supply decarbonisation must be scaled- up to allow decarbonisation through electrification 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 0 50 100 150 200 250 300 350 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 CO2emission(millitonne) CO2price(RMB/tonne) Stated Policies Below 2 Degree
- 12. The Below 2 scenario supports the Beautiful China vision
Editor's Notes
- Generators must navigate the uncertainties of simultaneous reforms. RE investments must wean off the comfortable business model of fixed price subsidies and navigate the emergence of spot-markets as well as medium- to long-term contracting markets as these are developed. Investors and asset owners shall have confidence that: They are able to capture adequate prices for their electricity generation They will not be curtailed, while being exposed to the market. There must be evidence that system flexibility develops as needed or they must develop more complex business models bundling VRE sources with own investments in flexibility and storage. The market must respond timely to the development of the demand for green, clean or non-fossil electricity – the pull from demand and the requirements from regulation. There must be confidence that, despite a slowing energy consumption growth resulting from energy efficiency and economic restructuring: There will be increased electrification, The authorities will abstain distorting the markets by supporting coal and gas and depress the prices. The 14th FYP should give priority to developing capacity and balancing capability near consumption centres, including giving focus on wind offshore developing, opening for more distributed siting of wind, and improving conditions for DGPV.
- Adding new coal power capacity should be avoided Adding new coal power capacity, with a lifetime of 40 years or more, would be counterproductive for the energy transition, introducing risks for stranded investments in a competitive power market. Investments in new coal capacity should be avoided or limited as much as possible. The institutional mechanisms for accelerating a smooth retirement of old and inefficient coal plant needs to be put in place. Limiting the share of coal in the electricity generation mix is critical for the reduction CO2 emission and structural enhancement of power supply, especially during 14-FYP, when renewable energies’ cost-competitiveness is just emerging, and the carbon price incentive is weak.