China is turning to its state-owned coal power companies to helm the next stage of the country’s renewables push, as the sector becomes less attractive to other investors. Private firms have helped the top-polluting nation become the world’s largest generator of clean energy. Now, as China chases a target to zero out carbon emissions by 2060, and with subsidies for renewables investments ending, government-controlled utilities need to take the lead.
The five biggest state-backed power firms have announced plans to develop about 305 gigawatts of new wind and solar capacity in the next five years, according to BloombergNEF, almost twice the amount it estimates the U.S. will install over the same period. At peak generation, the total being added would be about enough to power the whole of Japan.
“Carbon neutrality is a central responsibility of state-owned enterprises,” Li Peng, director of strategic management at one of the companies, State Power Investment Corp., told the Clean Energy Expo in Beijing last month. “We must provide society with green power. Our industry must empower others to reduce carbon and reach carbon neutrality.”
Renewables Rush
China’s 5 biggest power companies plan major investments in wind and solar that’ll see new renewables capacity eclipse coal additions
Sources: Wood Mackenzie Ltd., BloombergNEF
They’ll also benefit as China is forecast to burn a record amount of coal this year as its economy rebounds from the pandemic. Together, the major utilities control about half of China’s total coal power fleet. China thermal coal futures surged to a new record Thursday and held close to that level in early Beijing trading Friday.
The firms are accelerating renewable energy plans as government subsidies end and as authorities refuse to pay billions of dollars in past-due wind and solar fees. That’s made returns uninviting for private developers, but still palatable for state-owned ones that can borrow money more cheaply and need to meet social obligations like helping achieve climate targets, said Jonathan Luan, a BloombergNEF analyst in Beijing.
By pressing power firms to transition to renewables, policy makers will be hoping to accelerate coal’s demise. Utilities rely mostly on China’s vast reserves of the mineral to fire their plants, and consumption of the dirtiest fossil fuel is expected to grow for at least the next five years as the economy expands. President Xi Jinping wants the country to start reducing coal use from 2026 on its way to peaking emissions by 2030 and reaching carbon neutrality by 2060.