China’s renewable energy output rose by 8.4pc in 2020 from 2019, according to national energy administration (NEA) data. Continued growth in renewable output this year could weigh on demand for thermal coal, although stronger electricity demand will likely sustain coal as China’s leading generation fuel.
China produced 2,214.8TWh of renewable electricity in 2020, according to the NEA. The country consumed 7,511 TWh of power in 2020, which meant that slightly less than 30pc was from renewable output, derived from hydropower, wind, solar and biomass.
Of the four main sources of renewables, biomass led the year-on-year growth although it accounted for the least in terms of overall output. Biomass accounted for 132.6TWh, an increase of 19.4pc on the year. China produced 260.5TWh and 466.5TWh from solar and wind energy sources, gains of 16.1pc and 15pc on the year, respectively. China’s hydropower output grew by 4.1pc on the year to 1,355.2TWh.
Assuming that China’s renewable energy output will continue to grow at approximately the same rate this year, it may not be enough to keep pace with the country’s growing demand for electricity, sustaining thermal coal as the leading fuel for Chinese utilities. China’s power consumption for the first quarter of 2021 could grow by 20pc, according to the country’s largest utility State Grid Corporation of China (SGCC). China consumed 1,570TWh of electricity in January-March 2020, a decline of 6.5pc year on year, according to data from the NEA.
A 20pc year-on-year increase in national power generation in the first quarter of 2021 implies total output of 1,895TWh. China expanded its installed wind and solar capacity at a record rate in 2020, but a 20pc increase in power demand would still probably boost thermal generation, around 90pc of which is coal-fired.
Hydropower accounts for the bulk of China’s renewable energy mix. The January-March quarter is typically drier because of the transition from winter to spring, and the country’s meteorological administration has forecast that the country could face a relatively dry first quarter this year. This could limit the extent to which renewable energy could dampen the demand for thermal coal during the early part of 2021.
As China’s economy continues to rebound strongly from the impact of Covid-19 in 2020, stronger industrial demand for electricity this year is expected to sustain demand for thermal coal, outpacing the growth in renewables. The SGCC forecast recently that the country’s economy could grow by 14.8pc year-on-year for the first quarter.
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