China will need to fundamentally revamp its power generation and distribution system by 2060, as part of its roadmap to decarbonize the power sector and accommodate a fuel mix that largely replaces fossil fuels with cleaner energy sources, according to experts at a recent conference in Nanjing.
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The Chinese Society for Electrical Engineering, or CSEE, laid out one of the most detailed roadmaps issued by a Chinese think tank to date for achieving carbon neutrality by 2060 and peak emissions by 2030.
The think tank said by 2060 nearly 60% of China's power generation fuels will be from "new energy" sources, which mostly refers to renewables such as solar, wind, biomass, etc., excluding hydropower, up from around 10.5% in 2020, according to China Electricity Council data. This is equivalent to new energy capacities of around 5.2 billion kW by 2060.
The share of coal in power generation will drop to 7% by 2060 from around 60.8% currently, natural gas will drop to 3% from 7.1%, hydro will drop to 13% from 17.9% and nuclear will rise to 16% from 4.8%, although absolute power demand will still grow, CSEE projected.
To establish this zero carbon power system dominated by renewables, a fundamental reconfiguration of China's power system will be needed to account for issues like intermittency, new demand sources like electric vehicles, interregional imbalances and full digitization.
The roadmap was part of CSEE's consulting project titled "Carbon peak and carbon neutrality implementation path for the power sector" following the central government's call for a plan to decarbonize China's most carbon-intensive industry—power—which accounts for about 40% of its CO2 emissions.
CSEE projected that the transition of China's power system will have three phases: carbon peaking phase (2021-2030), deep decarbonization phase (2031-2050) and zero carbon phase (2051-2060).
This energy transition pathway aims to ensure stable power and energy supplies, as well as save carbon reduction costs for the whole society, Shu Yinbiao, president of CSEE, said at an industrial forum held in Nanjing on Aug 14.
Zero carbon phase 2050-2060
Shu said China's future power grid will face intense decentralization, volatility due to connections with diversified loads from demand centers like electric vehicles and energy storage facilities, and numerous micro-grids.
Insufficient peak shaving capacity, which is the ability of a grid to meet surges in power demand, and difficulties of long-distance power transmission are key bottlenecks for China's renewables utilization, Qiu Aici, academician of the Chinese Academy of Engineering, said at the forum.
China's solar and wind resources are unevenly distributed, with demand concentrated in the highly populated coastal, eastern and southeast regions, while generation is concentrated in the northern and northwest provinces.
Using long-distance transmission to overcome such uneven distribution negatively impacts the utilization rates of renewable capacities, because current technologies cannot effectively adapt to idiosyncrasies of renewable energy.
Digitalization is key to the next-generation power system, making it flexible, secure, and controllable, Shu said, adding that China's traditional power distribution needs to modernize from a "plan-first and one-way control" system to "dynamic sensing and two-way interactions" using advanced technologies like 5G, big data and cloud computing.
China's power sector reforms have targeted the regulated electricity distribution mechanism, where output is determined at an administrative level and implemented downstream, compared to regions with freely traded power markets where generation is based on real-time demand indicators.
Phase 1: High fossil share and carbon peaking by 2030
In the carbon peaking phase by 2030, 51% of China's power demand will still be met by fossil fuels, a heavy reduction from 68% from coal and natural gas in 2020, CSEE estimated.
Natural gas plays a crucial role in China's energy transition, especially in the early stage given nascent utility-scale battery technologies for energy storage. When power demand is high but renewable supplies are low in unfavorable weather conditions, natural gas, as the cleanest fossil fuel, can provide a stable buffer supply with relatively little environmental impact.
Natural gas demand is expected to grow steadily until 2040, Ma Yongsheng, general manager at Sinopec, one of China's state-owned oil majors, said at the same forum.
Shu said China will rely on carbon capture, utilization and storage technologies to remove carbon emissions arising from fossil fuel combustions and currently, the capture cost is as high as Yuan 400 ($61.81)/mt of CO2.
This implies CCUS will cost $54-$61/MWh for coal-fired power generation and $24 for gas-fired power, estimated using benchmark CO2 emission intensities from China's recently launched national carbon market.
Profit margins for coal-fired and gas-fired power generation have already fallen in China without CCUS, at around Yuan 60 ($9.27)/MWh and Yuan 79 ($12.21)/MWh, respectively, according to a recent study by Huadian Group, one of China's 'Big 5' utilities. Margins will shrink further if coal and gas prices surge.
As such, neither coal-fired nor gas-fired power suppliers can breakeven under such high CCUS costs, which makes large-scale CCUS implementation impractical in present day China.
Ma, however, said the oil and gas industry can facilitate CCUS development, and utilize CO2 captured to boost crude production and fabricate chemical products. He said the oil and gas industry can also help develop methane reduction technologies and track methane leakage, supporting future reliance on natural gas.
CSEE estimates the share of fossil fuels in the power mix to drop to 20% by 2050, with the sharpest drop coming from coal to 13% from 61% in 2020.
China's Pathway for Zero Carbon Power System (2060)
2020 power mix
2030 power mix
2050 power mix
2060 power mix
Sources: China Electricity Council, Chinese Society for Electrical Engineering
*New energy refers to renewables except hydro, such as solar, wind, biomass, etc.