China’s increased hydropower is a boon for its climate goals, and energy bills

Water flows over the Zhaoheng Dashiban power plant on the Zhougong River near Ya’an in Sichuan Province, China, August 4, 2018. REUTERS / Damir Sagolj

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SINGAPORE (Reuters) – A surge in China’s hydropower production this year, buoyed by record rainfall, has helped the world’s biggest polluter meet green targets as well as cut liquefied natural gas imports amid tight global supplies.

Global coal and liquefied natural gas prices hit record levels this year, fueling inflation as Western sanctions against Russia disrupted supplies from one of the world’s largest energy exporters.

But sluggish demand from China, among the world’s largest importers of coal and liquefied natural gas, has put an end to prices.

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“The situation in China this year is very unique, mainly because COVID-19 restrictions have limited energy demand and fast-growing renewables are able to meet the slow energy demand growth,” said Li Shu, senior advisor at Greenpeace.

The lockdown in Shanghai earlier this year and COVID-19 restrictions in dozens of cities hampered business activity, slashing electricity demand. Heavy rainfall and rapid growth in new capacities of other renewable sources have also reduced the requirements for fossil fuels.

Southern China recorded the heaviest rainfall in 60 years from March to May, with mega dams topping the region, raising hydropower generation 18% in the first five months of the year compared to the previous year. Read more

Meanwhile, production of thermal power, mostly from coal-fired facilities, fell 4% in the January-May period.

The hydroelectric power generation leap is also helping the world’s second-largest economy avoid the power shortage it experienced last year, caused in part by droughts that affected dam water levels.

This year, the flood season in southern China started two weeks earlier than usual, and rainfall has averaged levels not seen since 1961.

China currently relies on coal for about 60% of its electricity generation, down from more than 75% in 2010, 3-5% on gas and the rest on renewables.

Hydropower production in May jumped 27% year-on-year to 121.7 billion kWh, a record for the period. Heavy rains also allow the reservoirs to store more water for hydropower generation in the coming months.

“Remarkable progress

Although the government has urged miners to ramp up coal production since last year’s electricity crisis, China is not actually generating more coal-based energy.

“Only China is keeping pace with the net zero path of hydropower,” the International Hydropower Association said in a report last month. Over the past five years, the world’s hydropower has averaged 22 gigawatts (GW) per year, more than half of which comes from China.

The construction of the dams has drawn criticism from some environmental groups concerned over the damage to ecosystems and people’s livelihoods, as well as from neighboring countries who say dams on the Mekong are affecting water levels in the region.

China added about 23 GW of new hydropower capacity in 2021, bringing the total hydropower to 16% of the energy mix. Although solar energy is much smaller, it is growing more rapidly. In the first five months of this year, solar energy production increased by 13% year on year, accounting for 2.7% of total electricity production, a record high.

“China’s progress in adding new solar capacity has been really noticeable this year, with the government expecting a new record high of over 100 gigawatts. And in this respect, China is ahead of everyone else,” said Laurie Myllyvirta, senior analyst at Laurie Myllyvirta. . Energy and Clean Air Research Center.

The last gas in the resort

Abundant hydropower is also curbing China’s demand for expensive liquefied natural gas, helping to curb global prices that hit a record high in March in the wake of the Ukraine crisis.

Imports fell 20% in the first five months of the previous year, despite more gas flowing through pipelines. Analysts said a drop in Chinese demand could push it down one notch to become the world’s largest importer after Japan this year.

“Gas will likely only be used as a last resort after more cost-competitive options have been exhausted,” said Ken Kyat Lee, senior gas analyst at FGE.

It remains to be seen whether renewable energy can maintain its share of total demand consumption, but it appears that China is ready to benefit from its investment in renewable energy when energy consumption rises as the economy recovers.

China’s energy demand growth in 2022 is expected to be between 3.5% and 5%, according to four analysts, down from 10% last year.

“It is difficult to say whether this trend will continue as doubts remain about how quickly energy demand will return and whether the increased demand can be fully met by renewables,” said Lee of Greenpeace.

“But surely, more and more renewable energy is entering China’s energy system.”

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Editing by Jacqueline Wong

Our Standards: Thomson Reuters Trust Principles.

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