Renewables projects having better access to the grid, being able to more effectively sell generated power and, therefore, improved economic viability, are crucial to China successfully transitioning to subsidy-free renewable energy by 2021, analysts at Fitch Solutions argued.
Curtailment has led to more than $18 billion worth of feed-in tariffs for renewables power generated but not purchased, as per the country’s 2010 renewable energy law, Fitch noted.
This is because investment in transmission had failed to keep pace with renewables build-out from 15GW at the end of 2008 to more than 370GW by the end of 2018.
But China has stepped up investment in the grid and improved its curtailment rate in recent years, from 17.1% in 2016, to 7% in 2018, with notable improvements in inland provinces.
It has largely done this by investing in ultra-high-voltage transmission lines between provinces with surplus power generation and those with higher power consumption levels, often in coastal areas.
Further improvements will increase the investment case in regions with greater potential for more wind capacity, such as Inner Mongolia, Xinjiang and Gansu, which have good wind resources and land availability, Fitch said.
In turn, further investment will help drive down costs and make wind power in these provinces more competitive with coal-benchmarked tariffs becoming, effectively, subsidy-free.
Fitch forecast the capacity of China’s wind fleet to more than double between the end of 2018 and 2028.
It does not provide capacity figures, but China’s total installed capacity was around 200GW at the end of 2018.
Windpower Intelligence, the research and data division of Windpower Monthly, which distinguishes between installed and operating capacity, reported 192GW.