Continued and extensive power demand growth in China over the next 15 years means that targets for investment in generation plants have been significantly under-estimated, according to a new study by consultants Capgemini. An extra 280 GW of generation will be required by 2020, in addition to the 950 GW currently planned, says the report.
The report finds that the investment required to deliver the total power resources equates to $590 billion with the extra 280 GW adding $180 billion. While this represents a significant opportunity for investors the report also reveals that government targets for introducing a carbon-free energy sources are unlikely to be met.
According to the report the Chinese government has stated that it aims to reduce its dependence on coal fired capacity from 73% to 68% in 2010 and less than 60% in 2020. However, the research estimates that coal will still provide 71% of the supply in 2010 and 65% in 2020, limiting the role for renewables.
Colette Lewiner, energy, utilities and chemicals global sector leader at Capgemini, said: “The China power market will require on average 48 GW of new capacity every year. In the past 3 years, a nationwide power shortage spurred a new wave of physical investments in new power plants, which will restore a balance of short-term demand and supply expected by 2006 – 2007. But the huge growth of the Chinese economy means that without extra investment that surplus will dissipate once again between 2010 and 2020.”