China coal bubble: Why Beijing’s ‘new wind turbine every hour’ matters
China has over 900,000 megawatts of coal-fired capacity, equivalent to 1,300 coal-fired power plants.
And that number is set to grow substantially over the next several years, with hundreds more coal projects currently in the pipeline — more than 200 of which were given in the greenlight in 2015 alone.
You may have heard the stat that China builds one new coal plant per week, well – by our reckoning – it’s now building one idle coal plant per week.
That’s the consequences of a huge coal overcapacity crisis, which has forced Beijing to introduce tough new measures in order to stop (or at least slow down) the inflation of China’s coal power bubble.
With coal plants across the country running less than half of the time, the sector faces the very real prospect of a financial reckoning.
Recent research estimates that the equivalent of $11 trillion (more than an entire year’s GDP) has been spent on energy and infrastructure projects that generate little to no economic value.
And those upcoming coal projects? Well they’re due to cost nearly $100 billion on their own.
One of the causes of China’s coal crisis is the rising penetration of renewable energies.
In fact last year power generation from wind and solar increased more than China’s total electricity demand did — no new coal was needed at all.
In what the BBC and International Energy Agency have dubbed a ‘wind power frenzy,’ China is now installing new wind turbines at a rate of one per hour.
So there you have it: A battle is brewing in China between the under-seige but still dominant coal sector and the surging but still small renewables industry.