China Electricity Market Global Industry Outlook

  • Electricity generation capacity is expected to grow at a CAGR of 7.7 percent for next two years, with a growth of 33 percent CAGR in the renewable generation capacity from wind power
  • China’s dependence on thermal power capacity declined from 77 percent to 60 percent, and it can be expected to go below 50 percent by 2030, if the coal power production curb continues
  • China’s total electric power capacity increased to just over 1.89 tera watts (1.89 TW), with water, wind, and solar sources, accounting for 37.4 percent in 2018  up from 34 percent in 2016
  • It ranks first in R&D renewable energy with $1.9 billion spending by 2016 and it has the world’s largest floating solar panel with a generation capacity of 40MW

china-electricity-market-market-sizeSupply and Demand

  • Electricity generation is expected to grow at a CAGR of 6 percent for next two years to keep up with consumption while it is slower than expected and is expected to increase spare capacity in next few years
  • Electricity consumption in the grid is expected to grow at a CAGR of 7.5 percent for next 2 years, reaching 7912 TWh
  • in 2020
  • Transmission losses are at 5–6 percent currently, which is lower than the world average of 8 percent and it is expected that the losses will remain at a level of 5–6 percent by 2019
  • Dependence on hydro, wind, and solar rose to 25.4 percent in 2018, in terms of electricity generation and by 37.4 percent, in terms of electric power generation capacity

Generation and Consumption Profile 

  • Secondary industry has the highest share of 69% percent in the consumption share in 2018, followed by tertiary industry sector with 15.77 percent share
  • The tertiary industry sector is expected to have the highest consumption growth rate of 11 percent, followed by the residential sector
  • In 2019, tertiary industrial share is expected to be at 85.9 percent and residential sector at 13.9 percent
  • In the first 10 months of 2018, electricity consumption has reached 5660 TWh which is an 8.7% YoY growth compared to 2017

Capacity Addition and Utilization Outlook

  • Generation capacity growth rate is around 1.5 percent CAGR for next three years, which is lower than expected due to slowdown in power demand in China
  • Transmission capacity investment is expected to growth at 7.7 percent CAGR for the 2017–2020 period to create a single grid for China and to further reduce the transmission losses
  • In 2019, power supply capacity investment are expected to be ¥434.5 billion while power grid investments are expected to be at ¥620.4 billion

China – Renewable Energy Overview

China plans to rely more on electricity generation from nuclear, other renewable sources, and natural gas, in order to replace some coal with the goal of reducing carbon emissions and the heavy air pollution in urban areas. Renewable capacity addition for China is expected to increase by 14–16 percent for 2017–2019. Solar capacity is expected to grow, mainly due to the solar capacity target of 100 GW to be achieved by 2020.

  • China’s vast coal resources enable the fuel to be the major component, with 70.4 percent share in the electricity fuel mix
  • Solar is currently less than 3 percent of the total generation, however, with a more focus on renewable sources, generation capacity for solar power has witnessed a 50 percent jump in 2018
  • Chinese government has announced subsidy cuts for solar panel manufacturers, which is expected to slow down the solar power ancillary industry in the countryWind energy is the strongest RES contributor in electricity generation with a share of 5.2 percent in 2019

China Electricity Price Drivers

  • Regulations set by the government are the major drivers for electricity prices in China, as the price are regulated and completely controlled by government
  • Crude oil prices also impact prices in multiple ways by determining cost structure, economic growth, and hence, a rise in crude oil prices will definitely put an upward pressure on Chinese Electricity Prices