Wood Mackenzie predicts China's wind power market could reach a cumulative grid-connected capacity of 461GW by the end of the decade
The wind industry claims current net-zero pledges from G20 countries still put the world on a 2.4C global warming pathway (Credit: Wikimedia Commons/Tom Corser)
China is expected to add up 251 gigawatts (GW) of new wind power capacity between 2020 and 2029.
That is according to energy researcher Wood Mackenzie, which predicts the country’s wind power market could reach a cumulative grid-connected capacity of 461GW by the end of the decade.
The nation has more than 25 wind bases totalling over 100GW of capacity already planned and under construction to support near-term wind growth.
In the long run, Wood Mackenzie expects the falling levelised cost of electricity (LCOE) to drive capacity additions.
Looming deadline for the termination of national subsides a big challenge
But, in the short-term, the coronavirus pandemic – which first emerged in the Chinese city of Wuhan in December 2019 – has delivered a significant impact on the scale-up of renewables globally.
Wood Mackenzie senior consultant Xiaoyang Li said the virus has impacted 10% of new wind capacity additions this year in China alone.
“However, the bigger challenge for wind developers is the looming deadline for the termination of national subsidies by the end of the year,” she added.
“The combined impact from coronavirus and the rush to install new wind capacity before the end of subsidies, could cause the LCOE for wind to rise 8% to 472 Chinese Yuan ($68) per megawatt-hour in 2020 when compared to 2019.
“This will prevent onshore wind from meeting the government’s target for grid parity in 2021.
“Following a surge in new installations in 2020, we expect new onshore wind capacity to decrease 16% year-on-year in 2021 as wind developers grapple with a new subsidy-free era.
“The termination of subsidies could depress the market and hurt developer profitability in the short-term.”
Clean energy transition opportunities beyond the coronavirus
A report published in April by the International Renewable Energy Agency (IRENA) said the clean energy transition should be placed at the heart of government economic stimulus measures responding to the coronavirus pandemic.
It claimed this would take advantage of an opportunity to “accelerate the shift to sustainable, decarbonised economies”, as policymakers around the world pump trillions of dollars into recovery plans designed to help businesses and society mitigate effects of the coronavirus crisis.
IRENA suggested that while the investment needed to realise its “ambitious, yet realistic” net-zero pathway could be as much as $130tn by 2050, the benefits of such a financial intervention would be “massive”.
Along with tens of millions of new energy sector jobs, this level of capital investment could deliver a cumulative gain of $98tn to the global economy by 2050, according to the organisation.
That is why in countries such as China – which has the world’s second-biggest economy – continued investments in renewables are vital.
Although the nation remained the world leader in renewable energy capacity in 2019, it slipped back on its investments for last year, falling to $100bn from $110bn in 2018.
But wind power accounted for more than half of the funding, up from $51.6bn in 2018 to $56.4bn in 2019.
Solar took a huge investment hit, though, having reached $41bn in 2018, before dropping to $29.8bn last year.
Long-term expectations for China’s wind market
In the long-term, Wood Mackenzie expects China’s wind market to face greater competition from solar power.
It said solar installations, which have undergone substantial growth since 2015, will exceed wind in terms of cumulative capacity by the end of 2020.
The energy researcher predicts competition between solar and wind to intensify beyond 2026, when both wind and solar costs will fall below coal-fired power, particularly in provinces with “abundant wind and solar resources”.