January 17th, 2012
Econintersect: The China Electricity Council reports that China will invest less in new power generation and grid projects during 2012 due weak demand from a slowing economy, according to Shanghai Daily. After years of rapid growth, the demand for electricity is expected to increase less than 10% in the current year. In 2011 the total investment in power projects totaled 739 billion yuan (about $118 billion). This was up 4.8% from 2010.
Even in 2011 the investment in new generation facilities declined from 2010 (down 6.5%); it was investment in distribution (the grid), up 6.8%, that produced the overall increase. One problem is that profits for the electricity producers are under pressure. From Shanghai Daily:
China’s coal-fired power producers complain that surging coal costs and artificially low electricity prices have hurt their profits. Investment in the coal-fired power sector stood at 105.4 billion yuan in 2011 compared with 94 billion yuan in hydropower 74 billion yuan in nuclear power and 82.9 billion yuan in wind power.
The surprise in the Shanghai Daily numbers may be the wind power investment, which was more than ¾ that for coal generation and in the same ballpark with hydro and nuclear.
The 82.9 billion yuan ($13.3 billion) was 18% of the global investment in wind power for 2011 ($74.9 billion according to Bloomberg New Energy Finance). China consumed approximately 16% the approximately 4,500 GW of global electricity produced in 2007 (Green World Investor, quoting U.S. Energy Information Agency data). So it would appear that the news is not that China is developing wind power generation faster than the rest of the world; that does not appear to be the case. The news is they are curtailing new investments in other electricity generation areas.