High on the Tibetan Plateau in western China’s Qinghai province, a sea of solar panels stretches out across 345 square kilometers, making it the world’s largest photovoltaic power park. With another nearly 265 square kilometers of new panels set to be installed, the state-owned solar park in Gonghe County, Hainan Tibetan Autonomous Prefecture, will soon occupy an area nearing the size of Chicago.

Built by Huanghe Hydropower Development Company Ltd., this park might sound like an impressive feat amid a global race towards a green transition – the comprehensive shift away from fossil fuels and a more sustainable and environmentally friendly economy – but a major lack in investment in complementary power storage facilities has led to an imbalance between electricity supply and demand.

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Simply put, the province has too much power at some times, too little at others, especially at night.

The problem has become so acute that a number of experts have suggested that policy makers rein in the pace of clean energy development in the western region, especially the blind investment in scale and over construction, and consider focusing more on energy storage and backup power supplies.

“We can’t rule out that such large-scale investment will cause systemic problems, and then the country will have to step on the brakes to stop this crazy construction,” said Cai Yuanji, deputy head of the electricity and carbon market research center at the Tsinghua Sichuan Energy Internet Research Institute.

It’s not hard to see why there has been a mad rush to roll out a veritable carpet of solar panels across the region, along with other green energy power generation plants: Qinghai boasts annual average sunlight of more than 2,000 hours, the second highest in China after Tibet.

It is also prone to strong winds and is the home to headwaters of three waterways that rank among the world’s longest and busiest: Yellow River, Yangtze River and Mekong River.

These natural conditions provide Qinghai with a wealth of solar, wind and hydro energy resources. Unsurprisingly, the region has become a leading light of China’s ambitious green energy policy, with solar, wind and hydro power accounting for over 90% of the province’s total installed capacity, the highest in the country, said Wu Misen, deputy director of Qinghai Development and Reform Commission at a press conference in November.

The photovoltaic park in Gonghe County, Hainan Tibetan Autonomous Prefecture of Qinghai province on April 7, 2023

Solar power tops the list with 18.42 million kilowatts or 41.2% of the total, followed by hydropower on 12.61 million kilowatts or 28.2%, and wind power on 9.72 million kilowatts or 21.8%, according to the Qinghai Energy Bureau.

The boom in Qinghai’s solar power industry over the last five years has been staggering, with . installed solar power capacity nearly doubling from 2018 to 2022. The province currently has nearly 22 million kilowatts of solar power capacity. Under its 14th Five-Year Plan, that is expected to grow to 42 million kilowatts by 2025.

Other western provinces and autonomous regions are also aggressively expanding their investment in solar power. The latest data from the National Energy Administration shows that in the first 11 months of 2023, the total installed photovoltaic capacity across the country reached 560 million kilowatts, surging 50% from the same period in 2022. The investment in the sector during the same period reached 321 billion yuan ($45 billion), up 61% year-on-year, according to the data.

So it may come as a surprise to learn that outside of summer, Qinghai faces severe power shortages, as while its electricity production is abundant during daylight hours, especially during the longer summer days, it is insufficient at night. This shortfall becomes acute during the cold winter evenings when average low temperatures dip to minus 20 degrees Celsius, prompting people to crank up the heating in their homes to stay warm, overloading the grid.

And it’s not just solar. In August 2021, Qinghai, along with several other provinces, enforced power rationing measures on large industrial users, as weak water flow in the upper stream of Yellow River slashed hydropower utilization.

Consequently, despite over 70 billion yuan investment in solar power in from 2018 to 2022, the province spent about 7 billion yuan last year to buy out-of-province coal-fired electricity, according to data from Qinghai Energy Bureau. The cost was eventually passed on to business users, whose power costs surged by nearly 30% from 2019 to 2023.

The root cause of the problem is the structure of the local economy and the overinvestment in green energy projects, which inherently are subject to prevailing – and often cruelly capricious – weather and climate conditions.

Qinghai is not alone in facing this issue. Several western provinces and autonomous regions with a high proportion of renewable energy, such as Xinjiang, Ningxia and Gansu, are also facing a similar problem.

Intermittent energy

In a balanced system, solar power plants generate electricity from the sun during the day, when it flows directly onto the grid with unused portions going into storage, from where it can be utilized at night.

But as the investment in power storage capacity in Qinghai hasn’t kept up with the rapid increase in power generation, solar power plants are forced to forsake up to three to four hours of sunlight-generated power during the daytime because there is not enough capacity in existing facilities to store it.

Other renewable energy sources, such as hydro and wind power, also rely on weather conditions, and their intermittent nature poses challenges. How to maintain the stable flow of electricity when the wind dies, water levels in rivers or reservoirs drop and the sun goes down or whose rays are obscured by clouds cutting generating efficiency are problems all new-energy power plant operators face.

For solar, the excess capacity has resulted in the rising curtailment of power generation, a purposeful reduction in electricity output below the levels that could otherwise have been produced.

The head of a state-owned solar power plant in Hainan Tibetan Autonomous Prefecture told Caixin that their 100-megawatt solar station has to stop generating electricity three hours every day, or four hours in the summer, as the grid simply can’t handle the excess electricity.

The average number of local photovoltaic utilization hours annually is about 1,400-1,500 hours, despite the annual sunlight duration reaching more than 2,000 hours in Qinghai, according to a 2022 clean energy development report compiled by the provincial energy bureau. Among all the solar-rich regions, Qinghai has relatively higher curtailment ratio, according to the report.

Balancing the grid

As no solar power is generated at night, the grid usually needs to supplement supply from other generators, such as coal and hydro powered plants.

But Qinghai has a very limited number of coal-fired power plants. This was a deliberate move in order to build it into China’s model as a clean energy base, with Qinghai ceasing the addition of new coal-fired power plants over the last three years.

Currently, coal-fired power only accounts for 8% of the province’s total power supply. Less than 4 million kilowatts of coal-fired power capacity can hardly make up for the 30 million kilowatts of new energy power flowing into the grid annually.

In one example, an old coal-fired power plant in Xining, the capital of Qinghai, has been running nonstop for years without the necessary maintenance, because the grid can’t afford to bring it offline as a standby power source even for a day, said an official at the city’s energy development department.

“Coal power is now positioned as an important energy storage bank,” said Xue Jing, former director of the China Electricity Council, a non-profit and self-regulatory national trade association formed by the country’s power enterprises. Coal can act as a standby power source at peak times, which is necessary in the process of a rapidly expanding new energy sector, Xue said.

Qinghai should retain at least 10%-20% of its total power supply as coal power for this purpose, after considering the costs of purchase out-of-province electricity, suggested the Tsinghua Sichuan Energy Internet Research Institute’s Cai.

In light of coal’s resurgent importance in the energy mix, in 2023 the Xining government launched two new coal power projects, which are expected to start production in 2024 and 2025. The projects were originally approved in 2015, but had been shelved as green energy surged to the front of the priority list.

Another stopgap solution is to buy electricity from other provinces. In 2023, Qinghai bought 18 billion kilowatt hours of out-of-province electricity, up from 14 billion kilowatt hours the previous year, according to estimates by the Qinghai unit of State Grid Corp. of China.

The drawback is cost. Considering the long distances of the power transmission, it makes more sense to buy electricity from nearby provinces. But other provinces in northwestern China also face similar problem as Qinghai, meaning they have less to spare as they also rely heavily on new energy.

Therefore in recent years, Qinghai has had to buy power from the grid as far away as more than 2,000 kilometers in northeastern China. Needless to say, it is much more expensive than local prices. The standard price in the three northeastern provinces of Liaoning, Jilin and Heilongjiang is about 0.4 yuan per kilowatt hour, compared with about 0.23 yuan in Qinghai, the lowest in the country. Qinghai also needs to pay about 0.1 yuan per kilowatt hour for the long-distance transmission fee.

When the power companies pass on the higher costs to end users, it hurts the bottom line of some large business users. A major aluminum producer owned by state-owned Qinghai Investment Group Ltd., which accounts for about 20% of the province’s total power consumption, was forced into bankruptcy restructuring in 2021 due to the double whammy of rising power costs and plummeting aluminum prices.

Storage solutions

As such, Qinghai is also exploring other solutions. One is to build more pumped storage for hydropower, which are reservoirs used by electric power systems for load balancing. Such facilities allow for power supply to be kept constant when electricity from intermittent sources such as solar and wind and other renewables can’t meet demand.

Qinghai approved three pumped storage projects at the end of 2022. But these reservoirs will take an average of 80 months to build and won’t be operational until 2030, said Wang Meng, director of planning department at the Qinghai unit of State Grid.

Electrochemical energy storage is another widely used storage solution for renewable energy. Such storage uses rechargeable batteries to preserve excess power. But the high costs and short life span of the batteries- usually seven to eight years – make it economically unfeasible for solar power plants to recover their investment. The extreme low winter temperatures in Qinghai also affects the efficiency of electrochemical energy storage.

Selling power

But while there are power shortages at night, there is an excess solar power generated during the day. Qinghai, with one of the smallest GDPs in the country, doesn’t have enough demand for all the electricity it produces during daylight hours. In 2023, the total electricity consumption within in the province was less than 30% of its total power capacity.

So what to do with this excess power? One solution is to send the power to where it’s needed.

The main importer of Qinghai’s power is Henan province in central China. In late 2020, the Qinghai-Henan ultra-high-voltage direct current (UHVDC) transmission project, a 1,587-kilometer-long power line crossing four provinces, was put into operation to transmit up to 8 gigawatts of clean energy, including solar and wind power, from the west to the east.

The Qinghai-Henan ultra-high-voltage direct current transmission line.

But in recent years, Henan has also been ramping up its own solar power capacity. As of October, the central province’s installed solar power capacity doubled from two years ago, according to data released by the Henan Energy Regulatory Office of National Energy Administration.

Most areas in the province show that their power grid has reached load limit at noon time, which means it cannot accept more electricity into the grid, according to data from the Energy Big Data Center of the Henan Province.

To expand its clean energy exports, Qinghai is also considering building two more ultra-high-voltage power transmission lines to connect the province with eastern China’s Jiangsu and southwestern autonomous region of Guangxi, Caixin has learned from sources.

Yet even with the extreme imbalance between power supply and demand, multiple large solar power projects completed or under construction are lining up to connect with the already over-supplied grid. Over 10 million kilowatts of completed solar power projects are waiting to be connected with the grid, according to the head of a state-owned solar power plant in Hainan Tibetan Autonomous Prefecture.

Ultimately, while new energy projects such as these have helped to drive Qinghai’s economic growth, such rapid development eventually will lead to a waste of energy and investment, said an executive at a state-owned power company.