19-04-2021 Dry bulk: China to increase its share solar and wind in total power generation to 11% in 2021
According to a draft rule from China’s National Energy Administration (NEA), the country will seek to increase its power generation from solar and wind to 11% of total energy consumption in 2021, from 9.7% in 2019. YTD, we estimate Wind and Solar’s share of total electricity production at 9.4%.
In addition, the statement revealed China’s medium-term goal for solar and wind, set to reach 16.5% of total power use by 2025. For non-fossil fuels in primary energy consumption, the country aims to reach a share of 25% by 2030.
In our view, the announcement highlights China’s path towards a greener energy mix, with the near-term goals (i.e. 2021 and 2025) potentially speeding up the process as local authorities enables measures to reach these goals. For example, industry sources claims that local authorities have urged developers of solar and wind capacity to accelerate construction, whilst local governments have been asked to guarantee electricity generated from the plants to be able to connect to China’s grid.
In our view, the statement is largely in line with what has been previously communicated from the country, but near-term goals paint a firmer road towards these objectives.
Chinas thermal electricity production is up 22.4% so far in 2021, and has YTD accounted for 75.5% of total electricity production, which compares with 74.2% for the comparable months of 2020 and 75.6% for 2019. China is still struggling to reduce its dependence on thermal energy sources, with recent initiatives from Chinese authorities reading as an effort to increase the velocity of the transition.
In our view, the initiatives could displace seaborne coal volumes but recent trends still indicate reliance on necessary fossil fuel imports. However, we highlight the uncertainty related to China’s huge domestic production and future import quotas as the main determinants for seaborne imports of coal.