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China Quietly Restarts 46.7 GW of Coal Plant Construction After Two-Year Pause

Brian Jeffery Beggerly/Wikimedia Commons

China is quietly launching or restarting construction on 46.7 gigawatts—46.7 billion watts—of new coal-fired generating capacity, according to satellite imagery analyzed and released last week by CoalSwarm [1].

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If all the plants reached completion they would increase China’s coal-fired power capacity by 4%,” China Dialogue reports, reversing course on the country’s push to combat killer smog in many of its biggest cities. Over the longer haul, though, the plants may just translate into higher costs for an already troubled coal sector.

The article explains the unexpected restart as a disconnect between short-term electricity demand and longer-term trends and strategy. While the country has had too much generating capacity since 2016, “a rebound in industrial demand for electricity seems to have shifted attitudes among policy-makers, who are now more accepting of overcapacity,” said Greenpeace China coal and air pollution analyst Lauri Myllyvirta. “I think once the industrial rebound runs out of steam, there will be a renewed focus on overcapacity, but for now the issue seems to be firmly on the back burner.”

That means summer power shortages in many regions of the country have “resulted in a loosening of policy-level restrictions on the coal power sector,” China Dialogue states. “In May 2018, the National Energy Administration permitted Shaanxi, Hubei, Jiangxi, and Anhui to restart construction of coal-fired power stations. Restrictions were also relaxed to some degree in four other provinces.

But despite the surge in coal plant construction, “the policy of reducing capacity only temporarily reined in a trend towards overcapacity in the sector,” notes reporter Feng Hao. “Utilization rates for coal-fired plants recovered slightly from a 50-year low in 2016, but are still nowhere near a healthy level of about 5,500 hours a year, and have not even returned to 2015 levels. In other words, there is still too much coal-fired power.”

Prof. Yuan Jiahai of North China Electric Power University said some of the new plants “are almost complete but not generating power or making money, while loans taken out still need repaying.” Over the longer term, he added, building new capacity just to meet an immediate demand peak will end up driving up costs.

In late July, Li Fulong of China’s National Energy Administration told media that coal consumption had increased 3.1% in the first half of the year, compared to the same period in 2017. National Bureau of Statistics figures show electricity use growing 9.4% over the same period.

But “Li Fulong said that due to a hike in coal prices, half of the country’s coal power plants were running at a loss in the first six months of the year. The sector is in poor shape generally and is still trying to recover from a bad 2017,” China Dialogue notes. (h/t to Climate Home News [3] for first pointing us to this story)