This is an extract from a recent report “Global Electricity Mid-Year Insights 2023” by EMBER and this extract focuses on power market trends in China.

Power demand increased in China where problems with hydro necessitated higher coal consumption and led to increased emissions. China accounted for two-thirds of global growth in wind and solar generation in the first half of 2023, but poor hydro conditions led to an increase in coal power. The country is the world’s largest power producer, accounting for 31 per cent of global generation, and it will continue to be responsible for most future global demand growth. Hence, what happens in itselectricity sector is critically important to the global electricity transition.

In the first half of 2023, China accounted for 67 per cent of global growth in wind and solar generation, but poor hydro output meant that China also saw a significant increase in generation from coal.

China’s demand increased above the world average

China’s electricity demand grew 6 per cent (+246 TWh) in the first half of 2023, a larger increase than the 2.4 per cent growth seen in the same period last year. However, the country’s growth this year is in line with its average growth over the last decade (2012-2022) of 5.9 per cent. As usual, China’s demand growth in the first half of this year was significantly higher than the global average of 0.4 per cent.

Demand growth in China was mainly caused by economic growth, which is forecast to be about twice the world’s average this year, as well as heat waves over May and June resulted in increased demand from air conditioning in that period. Despite the temporary weather-related increases, the demand growth of 6 per cent this year so far has been in line with the China Electricity Council forecast for 2023 of 6 per cent.

China remains a global leader in new wind and solar generation

China continues to be the global leader in the build-up of wind and solar, accounting for 67 per cent of the global increase in wind and solar generation in the first half of 2023. China’s wind generation increased 26 per cent (+99 TWh) in the first half of 2023, compared to the same period last year, which is almost three times faster than the global average. China’s fast growth in wind generation is outpacing growth in the EU, Japan, and the US where generation either grew moderately or saw small falls. This meant that 91 per cent of global additions in wind generation in H1-2023 came from China. At the same time, China’s solar generation grew 21 per cent (+44 TWh), higher than global solar growth of 16 per cent. In the first half of 2023, China provided 43 per cent of the global increase in solar generation. Combined, the two sources grew 24 per cent (+144 TWh) in China, nearly double the global average growth of 12 per cent.

Generation from wind and solar in China has doubled in just three years. In H1-2020, 369 TWh were produced from wind and solar. In H1-2023, this had increased to 738 TWh. Consequently, the share of wind and solar generation also increased substantially, from 11 per cent in H1-2020 to 17 per cent of China’s electricity in the first six months of 2023. It is the first six-month period in which China has generated more than a sixth of its electricity from wind and solar.

China remains a global leader in new wind and solar generation

Wind and solar additions covered 58 per cent (144 TWh) of the increase in China’s electricity demand. Small increases in other clean generation, such as nuclear and bioenergy, contributed less than 10 per cent (18 TWh) of the rise in demand. New hydropower projects were also completed, but droughts saw output from hydropower fall by 22 per cent (-129 TWh). This hydro deficit–alongside the rise in demand that was not met by clean power generation–created a large shortfall which was filled by coal generation, which increased 8 per cent (+203 TWh) to a new record high.

With the hydro deficit, China’s coal generation increased by 203 TWh (+8%) in the first half of 2023, compared to the same period last year. Without this deficit it would have risen by 74 TWh (+2.9%). This would have been enough to turn a rise in global coal generation of 47 TWh into a fall of 82 TWh.

It is still possible for China’s hydro output in 2023 to recover. Severe droughts started to have a negative effect on China’s hydro generation in the second half of 2022, and continued into the first half of 2023. Average or good hydro conditions in the second half of 2023 could therefore see a return to output significantly above the previous year’s levels.

Rise in China’s power sector emissions

Driven by the increase in coal generation, emissions from China’s power sector jumped 7.9 per cent (+173 million tonnes of CO2) in the first six months of 2023. In comparison, global power sector emissions rose much more slowly (+0.2%). Most of the increase in China occurred from March to June. As of February, China’s power sector emissions had been 1.4 per cent below levels seen in the first half of 2022. However, from March onwards, poor hydro conditions led to an increase in coal generation.

Whether further increases in China’s power sector emissions can be avoided depends on several factors. If wind and solar continue to increase at their current growth rates, their additions alone could soon be enough to meet all of China’s increase in electricity demand. It will then depend on other clean sources such as nuclear generation and volatile hydro conditions as well as the rate of economic and demand growth, when we see the first structural emission falls in China’s power sector.

Access the complete report here