Guest post: China’s power sector could be ‘10% cheaper in 2030’ with more renewables

The costs for solar, wind and battery storage have dropped markedly since 2010 and are expected to decline further in the near future. This rapid fall in costs could have a large effect on energy system investment and policies, but has not been fully captured in energy modelling. 

This is particularly relevant for China, which is now debating whether to build hundreds of new coal-fired power plants in the 2020s, despite overcapacity and financial distress in the sector.

In a new study, published in Nature Communications , we worked with my colleagues to explore the implications of clean-energy cost trends for the electricity system in China over the next decade.

We found that if China uses the most cost-effective renewable energy resources, it could generate more than 60% of its electricity from “non-fossil” sources by 2030 – including wind, solar, hydro and nuclear – at a cost that is around 10% lower than under business-as-usual.

This cleaner electricity mix would still reliably meet rising demand. This suggests China could raise its target to get 50% of its electricity from non-fossil sources by 2030, while saving money.

Balancing priorities

It is often said that renewable sources of electricity, such as wind and solar, are variable and expensive. However, the recent innovation in technology and operation of electricity grids – and, in particular, the availability of cheaper storage – have changed the industry outlook.

In this study, we used an electricity system capacity expansion model ( SWITCH-China ) to explore how the Chinese power system could be expanded to meet rising electricity demand. We developed four scenarios for 2030 to explore the implications of a continued, rapid decrease in renewable energy costs.

The scenarios are:

1) Business-as-usual scenario ( B AU), which assumes the continuation of current policies and moderate cost decreases in future renewable costs;

2) Low-cost renewables scenario ( R ), which assumes the rapid recent decrease in costs for renewables and storage will continue;

3) Carbon constraints scenario ( C50 ), which has a power-sector carbon cap of 50% below 2015 levels in 2030, on top of the R scenario;

4) Deep carbon constraints scenario ( C80 ), which further constrain the carbon emissions from the power sector to be 80% lower than the 2015 level by 2030.

All scenarios assume the same electricity demand projection, which reaches 8,757 terawatt hours (TWh) in 2030, up from 7,225TWh today.

Our modeling results show that, as expected, rapid decreases in the costs of renewable energy sources lead to more wind and solar capacity being installed. If the levelised cost of energy (LCOE) for solar, wind and storage follows recent global trends then, by 2030, China could meet expected demand with 62% of its electricity from non-fossil sources under the R...

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