Spilled Wind: An Update on China's Wind Integration Challenges
According to tallies by the National Energy Administration, China added 14 gigawatts (GW) of grid-connected wind power capacity in 2013, now the fifth consecutive year with installs of over 10 GW (here, at a glance, is China’s grid in 2013). Over the same time period, wind curtailment – or, spilled wind, which is when the grid operator tells wind farm operators to reduce output because of reliability or other constraints – has become one of two sore spots, together with grid connection, for the otherwise booming sector (read more background on both topics). Official estimates now available of wind curtailment in 2013 show some improvements over 2012, though the problem is far from solved.
As in previous years, northeastern provinces with large coal-fired power capacities and the transmission-constrained northwestern region topped the list for curtailed wind. Inner Mongolia is part of two separate grid regions: the northwest (W. IMAR) and the northeast (E. IMAR). In the figure, I show the actual capacity factor as well as its reduction compared to the potential capacity factor according to official curtailment statistics.
Measuring curtailment is particularly tricky, because once turbines are slowed or halted it is difficult to reconstruct what the wind power production would have been otherwise. Comparing to the U.S., which consistently has an edge in terms of utilization of its wind turbines, China’s wind farms are under-performing, even after correcting for curtailment. This is largely attributed to different quality in components, though inaccurate curtailment numbers may also play a role. Collectively, this has led to the third year in a row of the unfavorable situation of China leading the world in wind capacity yet still trailing in terms of generation.
Approvals for new wind in some of the provinces heaviest hit by curtailment (Heilongjiang, Jilin, Inner Mongolia and Yunnan) are now being held up as the central government reconsiders how to divvy up its renewable subsidies and promote the sector most efficiently. Following a shake-up by the State Council last March, the central planning agency, the National Development and Reform Commission (NDRC), in theory gave up approval authority to the provinces, after only receiving it two years prior. However, currently, a “makeshift plan” which still incorporates centrally-administered annual targets is being implemented to transition to a more market-based approach.
On the other side of the spectrum, the capacity factor of thermal power (of which coal was 95% of generation in 2012) maintained historically low levels in 2013. Coal’s precipitous decline in the U.S. following the shale gas boom has led to a reduction in capacity factor of 14 percentage points here. Yet, whereas new coal builds in the U.S. are stagnant, China’s decrease has occurred amidst continued capacity expansion.
In these low utilization provinces, there is increasing evidence that China’s coal-fired power sector is overbuilt. In Jilin, for example, a wind-rich northeastern province, coal plants generate at less than 40% of their capacity even as coal capacity doubled from 2008-2011. The Jilin government is expediting approvals for large energy consumers and subsidizing their electricity bills above baseline in an attempt to pick up the slack.
Critically, overcapacity when coupled with China’s generation cost recovery mechanisms and constraining minimum outputs for thermal generators may mean less integration space for renewables—as I explained before here.
The China Electricity Council, in its 2014 projections and recommendations, called out the northeast’s excess capacity problem, recommending that the central government “strictly control” new coal and wind construction in the region. It projected a smaller (though still substantial) increase in coal-fired capacity nationwide of 30 GW. CEC’s other projections for new installs in 2014 (my calculation based on the current 2013 capacity figures): 23 GW hydro, 17 GW wind, 14 GW solar, 6 GW nuclear, and 5 GW gas.
A final note to follow-up on my last post, as the actual generation from each fuel source is what matters most. Thermal power generation grew 7.1% in 2013, according to recently released NEA stats, to 4,190 TWh – larger than U.S. electricity production from all sources (thermal generation by fuel type has not yet been disaggregated in official Chinese statistics). Anticipating another 7% electricity growth year, CEC predicts expansion across the sector. A 2% increase in China’s coal-fired capacity factor over 2014 may push thermal power generation above 4,500 TWh. Meanwhile, wind generation may reach 175 TWh, breaking the 3% mark in terms of total generation.