China’s Slowing Power Consumption Highlights Renewable Energy Gains

China’s renewable energy and nuclear energy industries are benefiting at the expense of coal as the nation shifts away from heavy industry, a finding underscored by data showing power consumption edged only slightly higher last year amid broad structural changes.

China’s gross domestic product expanded by 6.9 percent in 2015 from a year earlier, the least since 1990, according to government figures released Tuesday. Power consumption rose just 0.5 percent, slowing from a 3.8 percent advance the previous year, data from the National Energy Administration showed.

renewable energy

“The decoupling of electricity demand from economic growth is half” the strategy adopted by the world’s biggest polluter to decarbonize its economy, said Tim Buckley, director of energy finance studies at the Institute for Energy Economics and Financial Analysis in Cleveland. “Using less electricity is good, but with ever-more renewable energy installed, the diversification away from coal-fired power generation is accentuated.”

Coal imports fell about 30 percent last year to the lowest in four years, the biggest drop on record. The decline coincides with slower economic growth and as the composition of the nation’s economic activity shifts toward consumer-led expansion at the same time as the government seeks to curb pollution.

China’s services sector accounted for 50.5 percent of the nation’s economic growth last year, up 2.4 percentage points from 2014, Wang Baoan, head of the National Bureau of Statistics, said on Jan. 19. Raw coal production declined 3.5 percent to 3.68 billion metric tons, the statistics bureau’s data showed.

Replacing Dirty Capacity

As electricity demand slows, clean energy may be used more to replace dirtier capacity, said Sophie Lu, a Beijing-based analyst at Bloomberg New Energy Finance.

China will cut coal’s share of its energy consumption to 62.6 percent this year, from 64.4 percent last year, and will suspend the approval of new mines starting this year, Xinhua News Agency reported in December, citing National Energy Administration head Nur Bekri.

The country will also close more than 1,000 coal mines in 2016, eliminating 60 million metric tons of unneeded capacity, according to the Xinhua report. China shuttered a similar number of mines in 2015, wiping out 70 million tons of production, according to a separate statement from the NEA dated Dec. 29.

China’s clean energy investment rose 17 percent to a record $110.5 billion in 2015, almost double the $56 billion spent in the U.S., Bloomberg New Energy Finance data showed.

Clean Energy Plans

The nation plans to increase wind and solar power capacity by more than 21 percent in 2016, the NEA said in December.

“China will maintain a total of wind, solar, hydro and nuclear installs at a combined 60 to 70 gigawatts per annum for the next decade, meaning coal used for coal-fired power generation will actually decline each year going forward in absolute terms,” said Buckley.

©2016 Bloomberg News

Lead image: Coal pile. Credit: Shutterstock.

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