DONGXIANPO, China — Just outside the southwest border of Beijing, a new coal-fired power and heating plant is rising in Dongxianpo, a rural town in Hebei Province. Cement mixers roll onto the site. Cranes tower above a landscape of metal girders.
[ by Edward Wong | November 11, 2015 | NY Times ]
When finished, the plant, run by a company owned by the Beijing government, is expected to have a generating capacity of 700 megawatts of power, more than the total of similar plants in Ohio. But whether it will actually be used to its fullest is questionable, despite the investment of $580 million.
That is because the plant is scheduled to come online in three years amid a glut of coal-fired power plants — an astounding 155 planned projects received a permit this year alone, with total capacity equal to nearly 40 percent of operational coal power plants in the United States.
China’s economic slowdown and the government’s pledges to use more renewable and nuclear energy make some of the country’s existing plants and most or all of the 155 new ones unnecessary, according to interviews with officials and scholars, a review of public statistics and a report released Wednesday about the “coal power bubble” by Greenpeace East Asia. There are already too many plants, as shown by a steady decline in the plants’ average operating hours since 2013.
China’s state-controlled economy creates strong incentives for provinces to manage their own energy sources to generate jobs and revenue. Coal plants have long been the easiest, fastest way for provinces to meet their own energy needs and stimulate local economic growth.
That system has created what appears to be a disconnect between the provincial building boom and the country’s overall energy requirements, making it harder for China to convert to a system that is not dominated by dirty fuel.
“China already has more coal capacity than it will ever need,” Zhang Boting, vice chairman of the China Society for Hydropower Engineering, said in an interview. “A few years down the road, we’ll see what a waste the plants are. We have seen this happen to the steel and cement industries.”
In the first nine months of this year, state-owned companies received preliminary or full approval to build the 155 coal power plants that have a total capacity of 123 gigawatts, the report said. That capacity is equal to 15 percent of China’s coal-fired power capacity at the end of 2014.
The construction boom — with capital costs estimated by Greenpeace at $74 billion — is a clear sign that China remains entrenched in investment-driven growth, despite promises by leaders to transform the economic model to one based on consumer spending.
It also raises questions about whether China is weaning itself from coal as quickly as it can and whether officials are sufficiently supporting nonfossil fuel sources over coal, which is championed by some state-owned enterprises. China is the biggest emitter of greenhouse gases in the world and the main driver of climate change, and it has some of the worst air pollution.
Conflict within the system is rising. Renewable-energy interests — wind, solar and hydropower — are pushing back against coal-fired power plants, which have 40-year life spans. They say the rising number of coal plants prevents other energy sources from selling electricity on the grid and attracting more investment. They want the government to move faster with its promised “green dispatch,” giving priority to low-carbon electricity sources.
“Why do we see so much discarded water, wind and solar resources everywhere?” Mr. Zhang said. “Because all those coal plants need market share. Local governments need to maintain stability and employment, and to do so they need to give all the coal plants just enough market share to survive.”
Utility contracts guarantee that coal-fired plants operate a minimum number of hours to sell power to the grid, while renewable sources have no such guarantee. Wind power capacity has been growing in China, but so has the amount of wasted wind power, called curtailment, according to National Energy Administration statistics. In the first half of 2015, the rate of curtailment was 15 percent, almost twice that of the same period in 2014.
The State Grid Corporation of China, the country’s largest power distributor, did not respond to a request for comment. It is also one of China’s biggest owners of coal-fired power plants.
Qin Haiyan, secretary general of the Chinese Wind Energy Association, told the China Electric Power News, an official industry newspaper, that if the country’s appetite for new coal plants was not curbed, “the conflict between coal and wind will become even more fierce in the next few years.”
Mr. Zhang said the dominance of coal power had led to “a sharp decline in investments in renewable energy.”
Hydropower is generated by provincial or central state-owned enterprises. The China Electricity Council, a power industry association, said in a report this year that investment in hydropower had dropped for three straight years and that the amount in the first quarter of 2015 was half that of the same period in 2012.
Nevertheless, China is building more renewable and nuclear energy capacity. The government has said that by 2020, 15 percent of energy consumption will be met by sources beyond fossil fuel. The growth in renewables and nuclear power is expected to meet an estimated 3 to 4 percent annual growth in electricity demand in the coming years, which makes new coal-fired plants unnecessary, said Lauri Myllyvirta, a main author of the Greenpeace East Asia report.
Despite the construction boom, Mr. Myllyvirta and some scholars say there is little danger that China’s coal consumption will rise significantly, since a slower economy and flattening coal use appear to be the new norm. President Xi Jinping said China was aiming for 6.5 percent economic growth from 2016 to 2020. The construction boom means that China is not investing in alternative fuel sources as quickly as it could, critics say, and coal use may stay at or near the current high level for years.
“You’re wasting a massive amount of capital that could be spent on renewable energy to generate green power that is needed,” Mr. Myllyvirta said. “And there’s a longer-term question of whether you will keep investing in renewables when you have all these coal plants lying around.”
Coal plants now operate well below full capacity, with the average number of operating hours on the decline, the Greenpeace report said. Last year, thermal power plants, mostly coal-fired, operated 4,706 hours on average, 314 hours less than in 2013, according to the National Energy Administration. “At any given moment, more than half of capacity is idle,” Mr. Myllyvirta said.
The report recommended that officials cancel many projects and that the central government “urgently institute a ban on issuing new permits for coal-fired power plants.”
Though the total amount of coal-fired power capacity has grown annually, China is shutting down some older and smaller plants, especially in more populated eastern regions. By 2020, the central government aims to have coal-fired power generated mainly in western provinces and transmitted to the east via ultra-high-voltage lines. But Greenpeace researchers found that eastern provinces were still handing out large numbers of permits to build new coal plants.
Jiangsu Province has issued permits for 17 plants this year, while Shandong Province has issued permits for 16 — the second and third most plant approvals in the country, behind Shanxi Province. That goes against central policy, since regulations require those provinces to curb coal use.
Mr. Myllyvirta said that even the western provinces did not need so many new coal-fired plants because the current overcapacity and planned expansion of renewable and nuclear energy sources could meet the expected rise in demand for transmitted electricity.
Greenpeace estimated that if the 155 plants operated at typical levels for new projects, they would emit 560 million metric tons of carbon dioxide annually, equal to Brazil’s total energy emissions. They would also spew huge amounts of toxic pollutants, and 60 percent would operate in arid areas or ones with chronic water shortages, exacerbating those problems.
The increase in permit approvals followed the enactment of a policy in March that allows provincial environmental officials rather than the central Ministry of Environmental Protection to approve projects, in the interest of streamlining bureaucracy.
Provinces have an economic interest in keeping coal-fired power generation close to home, despite concerns over air pollution. Provincial state-owned enterprises running the plants have a guaranteed source of revenue. Also, officials can tax coal power plants but not renewable-energy projects. And plant construction improves economic growth, an important measure in evaluations of provincial officials.
The Beijing Jingneng Power Company, which is building the Zhuozhou plant here in Dongxianpo township, is owned by the Beijing government. This year, the company was forced to shut down a plant in Beijing because of an air pollution control regulation that calls for the elimination of all coal-fired plants in the city by 2017. But Jingneng had begun building the plant right across this border. The company declined an interview request.
“It takes a lot of time to switch the economic growth model from investment-driven to consumption-driven,” said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University. “Now the only way to drive up economic growth is still to rely on investment.”
Mia Li and Kiki Zhao contributed research.
