While most of the energy-related news last week focused on the anniversary of the Tohoku earthquake and tsunami — and the accident at Japan's Fukushima-1 nuclear plant that was a result of this natural disaster — across the Sea of Japan, China announced plans for the future: accelerate nuclear, while putting the breaks on solar and wind.
China will accelerate the use of new-energy sources such as nuclear energy and put an end to blind expansion in industries such as solar energy and wind power in 2012, Chinese Premier Wen Jiabao says in a government report published on March 5.(source)
That's not to say that renewable energy will be left out. On the contrary, China intends to expand renewable energy to 11.4% of China's energy consumption by 2016. Hydroelectric will play the largest roll in this expansion, contributing two-thirds to this target and adding 20 GW of new installed capacity, which is expected to cost about $21.7 billion.
Other renewables, like wind and solar, will continue to contribute and expand, but they will take a back seat to nuclear power and hydroelectric in China's new energy plan. Why? Although their deployment has been very rapid in recent years, their performance has been dismal. In the opinion of one energy insider:
... China will pay more attention to the utilization of new energy, hence wind power and solar power, which failed to achieve sound utilization, will bid farewell to the era of fast development, said Zhai Ruoyu, former general manager of the China Datang Corp., one of China's five power giants.China has good reasons to reign in this "blind expansion" that Wen Jiabao refers to. As many renewable-energy advocates on DailyKos have pointed out in recent years, the renewable sector in China, particularly in the manufacturing sector, has been going gangbusters. Since 2008, China's capacity to produce both solar modules and wind turbines has doubled each year. Today, China now leads the world in the ability to manufacture this equipment.
Unfortunately, the markets for this equipment were not as quick to develop. For example, in 2010, China manufactured about 8 GW worth of photovoltaic (PV) modules, but it installed less than half a GW (about 5%) of that production.
This imbalance has global repercussions, since China has had no choice but to try to export the massive surplus. This has flooded markets in countries like the US, leading to a (spuriously) low cost for solar modules in recent years and accusations of "dumping" by bitter US manufacturers who have been forced to lay off workers or declare bankruptcy in recent years (Solyndra being the most notorious example).
Even such aggressive moves by the Chinese have not been enough to cover the deficit. Although sales in the US have remained reliable, fueled by generous government incentives and Renewable Portfolio Standards, other markets have not been as lucrative as originally anticipated. For example, countries like Spain have been forced to drastically cut their subsidies in recent years after coming to the hard realization that they cannot afford to pay for such luxuries as outrageously expensive forms of power generation in difficult economic times.
As a result, solar modules remain unsold, and the Chinese PV manufactures have accumulated large inventories of unsold product. Thus, it is not surprising that the Chinese government wants to halt further expansion of renewable energy equipment manufacturing.
Even the minority of renewable-energy equipment that ends up installed in China has severely underperformed, much of it due to poor planning. Although the numbers for installed capacity (the numbers that renewable-energy advocates on DailyKos love to reference) are quite impressive, the capacity does not translate directly to actual use. While the installed capacity of solar reached 3 GW and the installed capacity of wind reached 62 GW by 2010, only about 70% of the installed wind power in China was actually connected to the grid in 2010, and less than 60% of the installed solar capacity was connected.
Although part of the problem with integration of renewable energy into China's grid is the result of an energy act passed in 1996 — which imposes standards that are difficult for solar and wind producers to meet — the rapid rate of deployment, without an accompanying expansion of the infrastructure to accommodate such growth, has certainly contributed to and exasperated the problem.
What is worse is that this is before you consider that the capacity factor (i.e., ratio of the amount of electricity that will be generated relative the amount that could be generated based on capacity factor) for wind is less than 30% and the capacity factor for solar is less than 20%. This means that the 65 GW of installed solar/wind capacity generates less than what 15 GW of fossil-fuel or nuclear capacity would.
China also plans to continue using fossil-fuels. While they plan to decrease (slightly) the share that fossil-fuels provides to their energy mix, they also plan to "tackle key problems more quickly in the exploration and development of shale gas." So stay tuned.
Finally, as mentioned in the introduction, China plans to accelerate its nuclear energy program. Today, it has 14 nuclear reactors in operation and an additional 25 currently under construction. In addition to the near-term increase in nuclear capacity — much of it purchased abroad — China has been engaged in R&D projects to develop new technologies in this area. The plants currently under construction will very likely be the last nuclear reactors that China purchases from other countries. Meanwhile, China is aggressively pursuing the following nuclear technologies:
- Advanced Light Water Reactors – A modernized version of the type of
reactors we have in the US
- Pebble Bed Reactors – An innovative technology originally pioneered in Germany
- Reprocessing – For recycling the so-called "nuclear waste"
- Liquid Metal Reactors – China has claimed that it can meet its
electricity needs for 3000 years using existing uranium
resources and this technology
- Molten Salt Reactors – China is the first country to seriously
reconsider this technology in about 40 years
Expect these nuclear R&D programs to expand and accelerate in the next five years. Meanwhile, expect the cost of cheap solar modules and wind turbines to either remain static or increase in the coming years as a result of changes in China's attitude.