China is to stop or delay work on 151 planned and under-construction coal plants as Beijing struggles to respond to a flat-lining of demand for coal power.
The newly released list implements a target announced by premier Li Keqiang in March to stop, delay and close down at least 50,000 megawatts of coal-fired power plant projects in 2017.
The list affects coal power plants with capacity equal to the combined operating capacity of Germany and Japan (95,000 megawatts) costing around US$60 billion (389 billion rmb).
The amount of capacity affected hence exceeds the target set for this year but is still well short of the total of 150,000 megawatts the government says is needed by 2020.
However the number of plants on the list has shrunk by around 15% from an original list of 182; a watering down of earlier plans after intense political negotiations. Also, the majority of the plants are technically only “delayed”, putting off the final decision to cancel the projects.
Building new coal-fired power plants doesn’t directly increase CO2 emissions, because coal-fired generation in China is limited by lack of demand. But it does create a conflict between dirty and clean energy in the grid, because the grid operators tend to favor coal power plant operators when dispatching electricity.
Fewer plants hit
The coal industry bastion of Shanxi has managed to remove 6,000 megawatts of capacity from the list, despite having one of the worst overcapacity situations in the country.
Construction of coal-fired power plants remains a coveted source of economic activity and of demand for locally mined coal for many provinces but the boom in China’s renewable industry and a slow-down in demand has left China with hundreds of coal plants it doesn’t need.
After a long period of rapid growth, the amount of power generated from coal flat-lined in 2014.
The change came thanks to China’s renewable energy boom and a slow-down in power-demand as the country moved away from heavy industry.
Yet the country kept building coal plants leaving China with power-stations often operating at less than half their capacity.
China hit the brakes on approvals of new coal-fired power plant projects on the second half of 2016, but previously approved plants have continued coming online at a rate of almost one large plant per week.
Last year, China set a target of stopping or delaying at least 150,000 megawatts of coal-fired power plant projects to alleviate the looming overcapacity problem with the new list marking the start of this process.
The task of addressing coal power overcapacity is made more urgent by newly increased targets for wind and solar power capacity, which will bring more clean energy to the market in the next few years.
The government’s recent efforts to clamp down on the red-hot real estate sector and local government debt spending – key drivers of China’s heavy industry volumes and power demand – will also leave less space for coal-fired power generation.