Launceston, Australia — China is adding renewable energies such as wind and solar to its electricity grid at a record pace, but it is also boosting the use of coal-fired generation, with September data showing a sharp increase.
The world’s second-biggest economy saw power generation of 802.4-billion kilowatt-hours (kWh) in September, an increase of 6.0% from the corresponding month last year, official data showed last week.
The share of thermal generation, which is mainly coal-fired with only a tiny amount of natural gas, rose 8.9% from a year earlier to 545.1-billion kWh. The main reason for the increase was a reduction in hydropower, which contracted 14.6% to 119.9-billion kWh.
The sharp loss of hydropower came after a strong run for the largely emissions-free source of electricity, which had shown growth of 10.7% in August and 36.2% in July as water reserves recovered after a dry period.
But even the rapid rollout of renewables was not enough to cut China’s reliance on coal.
In the first nine months of 2024 China added 161 gigawatts (GW) of new solar capacity and 39.12GW of wind power, year-on-year increases of 25% and 17%, respectively. In contrast, new thermal capacity was 33.43GW, down 15% from the first nine months of 2023.
Another factor worth noting is that China’s power consumption is rising rapidly, gaining 8.5% in September to 847.5-billion kWh, with demand reaching 7.4-trillion kWh for the first nine months, an increase of 7.9%.
China’s electricity consumption is rising at a pace well in excess of economic growth, with GDP gaining 4.6% in the third quarter and 4.8% for the first nine months. This is a switch from the first two decades of the 21st century, which saw economic growth outpace power generation.
Factors driving electricity demand include the increase in electric vehicles, which now account for almost half of new-car sales, and growing use of air-conditioners and other appliances favoured by an expanding middle class, such as dishwashers.
The increasing use of electricity and the reliance on coal-fired power is also driving China to import more of the polluting fuel. The world’s largest importer of coal, China is on track to import 33.67-million tonnes of thermal coal from the seaborne market in October, data compiled by commodity analysts Kpler shows. That would be the highest monthly total in Kpler records going back to 2017, and an increase from the 28.08-million tonnes assessed for September.
The jump in October imports of thermal coal, the grade used mainly for electricity generation, has largely been met by an increase in supplies from Indonesia, the world’s biggest exporter of this type of coal. China’s thermal coal imports from Indonesia are expected to reach 23.49-million tonnes in October, up from 18.83-million in September.
The second-biggest supplier of seaborne thermal coal to China is Australia, and Kpler estimates October imports at 5.69-million tonnes, up from 5.1-million the previous month and the most since June.
The rising Chinese demand has led to some uplift in seaborne thermal coal prices, with Indonesian 4,200 kilocalories per kg (kcal/kg), as assessed by commodity price reporting agency Argus, ending at $52.22 a tonne in the week to October 18. This was down fractionally from the previous week’s $52.34 a tonne but up from the 42-month low of $50.08 hit at the end of August.
The main grade of thermal coal that China buys from Australia, the Newcastle 5,500 kcal/kg, was assessed at $90.28 a tonne in the week to October 18, down slightly from the four-month high of $90.97 the previous week but higher than the recent low of $86.41 from late August.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.