China’s Remote Deserts Are Hiding an Energy Revolution

Courtesy of Bloomberg, a look at China’s strategy to use remote regions to host vast green projects;

Out of the rolling yellow dunes of the Kubuqi desert arises what appears to be an oasis, shimmering blue beneath the northern China sky.

Row after row of hundreds of solar panels cover this otherwise barren stretch of Inner Mongolia, about 500 kilometers (311 miles) inland from Beijing. They’re the centerpiece of a clean energy project the size of 20 Central Parks that provides enough electricity for 1.1 million homes.

The mammoth site is just one small piece of President Xi Jinping’s plan to deliver the largest ever deployment of man-made power capacity. By the end of this decade, China aims to build the equivalent of 225 more of these massive renewables bases across vast swathes of the country’s interior.

It’s a campaign that promises an upheaval across the energy sector: curbing China’s demand for fossil fuels, trimming its reliance on energy imports and steering the world’s biggest polluter toward a feasible path to zero out its greenhouse gas emissions.

Once complete, the renewables bases will total 455 gigawatts of wind turbines and solar panels. That’s more clean energy generation capacity than is currently available in any nation outside China, and almost the size of the entire power network — including coal plants and nuclear reactors — in India, the world’s third-largest system.

“It’s mind-blowing,” said Cosimo Ries, a Shanghai-based energy analyst with Trivium China. “There’s nothing in history you can benchmark this against.”

Few details on China’s desert developments have been disclosed since Xi outlined his vision for the strategy in a 2021 speech. Now, work by Bloomberg News and analysts at BloombergNEF to visit sites, interview those involved and review thousands of pages of government documents and industry databases is offering the first major assessment of progress.

The analysis reveals a rollout of solar and wind that’s put China on track to reach records this year that far exceed its already world-beating adoption of green energy. So much clean power is coming online that the country could reach peak emissions well ahead of its 2030 deadline, giving the planet a better chance of keeping global temperatures in check.

It’s also a crucial example as COP28 President Sultan Al Jaber pushes more than 200 countries to use the United Nations climate summit opening in Dubai this week to commit to a tripling of renewable power generation this decade. Achieving the target is probably the most important action the world can take to hit net zero, according to the International Energy Agency.

China will lift renewables capacity to about 3.9 terawatts by 2030, more than three times the amount in 2022, BNEF said in a report last week. Al Jaber is urging attending nations in the UAE to aim to lift the global total to 11 terawatts.

Efforts to assess the desert strategy uncovered details of about 90 gigawatts of the planned 97 gigawatts being added in a first batch of projects, all of which are intended to be installed by the end of this year.

As of early this month, about a third of capacity was completed and a further half was being built. The nation’s developers are known for end-of-year rushes to meet construction deadlines. One gigawatt is about the equivalent of capacity at a typical nuclear reactor.

For a small volume of capacity, there’s still no clear sign that work has begun, according to BNEF. Some projects that were rushed into planning after Xi’s announcement are now being challenged by local land use or environmental authorities, including a development in Inner Mongolia that’s been accused of damaging forests.

“China is relying on these large wind and solar bases to play a key role in its new energy system,” said Michal Meidan, head of China energy research at the Oxford Institute for Energy Studies.

The initial batch of projects focuses heavily on China’s deserts, including the Gobi in the north and the Takla Makan in the west. Both have played a key role in the nation’s development, providing natural boundaries that protected the country from outside invaders and limited the landward expansion of its historical empires.

They also offer benefits for renewable energy: wide skies and open plains with China’s most consistent sunshine and steady winds. They’re sparsely populated too, making it far easier to construct large-scale projects.

And there’s an economic advantage. Land is cheap because there’s little competition for space with major agriculture or real estate development, and the vast scale of many developments can help lower costs. Those factors mean the desert bases will likely be among the cheapest sources of power in the world, according to Ries.

That’s potentially crucial at a time when the world’s clean energy sector is coming under its most severe financial pressure in years, even as installations boom and with an estimated $1 billion a day being invested in solar alone.

Companies are being squeezed by volatile costs, high interest rates, and — particularly in China — fierce competition that’s driven down prices of clean energy technologies by almost 80% since 2010.

Constructing large-scale energy bases can help take advantage of China’s now mature clean energy industries, according to Liu Hanyuan, the billionaire founder of Tongwei Group, which owns one of the world’s largest solar firms. “They can support the country to accelerate its energy transition,” Liu said at a Chengdu conference this month. China “can even complete the process ahead of Western countries.”

  • The Kubuqi desert development is just one of at least a dozen new solar and wind projects being built under Xi’s program in Inner Mongolia, which accounts for the largest share of the first batch.
  • Shaanxi and Qinghai — which also have large desert areas — are other priority regions for installations. Projects in the first batch are spread across more than a dozen provinces.
  • China’s 455 gigawatt program will add about the equivalent of the current combined renewable energy capacity of Canada, Japan, Germany and France.
  • Individual Chinese provinces already have more renewables installed than entire nations. Sichuan has almost double the capacity of the UK. Hubei hosts more than Russia.
  • The world is likely to add 500 gigawatts of renewables capacity this year, and needs to triple deployments by the end of the decade, according to the IEA.
  • About 20 GW of solar and wind capacity is expected to be added in Inner Mongolia by the end of 2023. More than half is already in operation.
  • Capacity of the world’s largest power plant, the Three Gorges Dam
  • Wind turbines generating this much power laid end to end would stretch from New York to Chicago
  • Capacity of the world’s biggest proposed clean energy project, the Western Green Energy Hub in Australia
  • Amount of renewables capacity in Texas, the US state with the largest volume
  • Solar panels generating this much power would completely cover the Gardens of Versailles more than 100 times over
  • Using this much solar and wind power to replace coal-fired power would remove the equivalent of 140 million tons of carbon dioxide emissions
  • This much wind and solar can generate more electricity at their peak than all the power plants in Philippines, Belgium and Chile combined

Among beneficiaries from the roll-out are China’s massive state-owned utilities. China Energy Investment Corp., China Three Gorges Corp., China Datang Corp., China Huaneng Group Co. and State Power Investment Corp., have all had involvement in projects so far.

The desert power bases will also help shore up domestic demand for Chinese suppliers of renewable energy equipment, which have aggressively added capacity and face trade curbs or increased scrutiny in export markets including the US and European Union.

Three further batches of projects under Xi’s strategy will add another 358 gigawatts of solar and wind energy capacity by the end of the decade.

Future phases could prove more difficult to progress as they’ll be reliant on China’s efforts to extend its network of ultra-high voltage power lines, which can transmit electricity across thousands of kilometers.

The ability to link far-flung power generation hubs to urban demand centers has stymied development of massive clean power projects in places like the windswept plains of the central US, or the sun-soaked deserts of northern Australia.

China’s solution is a national network of new power lines that could take decades and cost as much as $300 billion to install. It’s already built more than 30 such conduits, while the rest of the world has only a handful.

Transmitting Power

Dozens of ultra-high voltage (UHV) power lines connect areas with higher energy resources with more populated provinces

Several of China’s existing UHV lines criss-cross northern deserts that are now home to the renewables projects. They’re currently underutilized and transmit mainly coal-generated electricity. Authorities aim to use the infrastructure to deliver clean power to eastern mega-cities like Shanghai and Beijing.

State Grid Corp. of China, which supplies electricity to more than 1.1 billion people, began work last year on a 150 billion yuan ($21 billion) power line project.

There is also another prospect. Instead of electrons just flowing east, factories could move west. Around the hydropower-rich mountains and rivers of Sichuan and Yunnan, local leaders previously used the promise of cheap electricity to woo energy-intensive industries and now host plants for Toyota Motor Corp. and Contemporary Amperex Technology Co., the world’s top battery maker.

Inner Mongolia’s industrial hub Baotou, traditionally a center for coal and steel, is marketing itself as the “World’s Green Silicon City,” to lure factories that process the metal needed for semiconductors with low-cost, renewable power. About 70 miles south in Ordos, Envision Energy — a battery producer and China’s second-largest turbine maker — is building a wind, solar and hydrogen-powered industrial park for the production of electric vehicles and components.

Investment in renewables in Inner Mongolia has surged this year and is acting as a catalyst for high-tech industries, Wang Lixia, head of the autonomous region’s government, said last month in Beijing. “The growth of new energy has brought rapid growth to our economy,” she said, following a meeting with California Governor Gavin Newsom.

Renewable equipment manufacturers are also following the solar and wind projects north, aiming to benefit from the rush of investment. China is forecast to see average annual investment in its energy supply of at least $386 billion to 2050, and potentially more than $600 billion a year under more aggressive climate action, BNEF said in May.

Ming Yang Smart Energy Group Ltd., which produces the world’s largest wind turbines — some almost as tall as the Eiffel Tower, is using a factory in Baotou to seek more orders from the desert buildout, according to Liu Wei, a manager at the site. The facility has an initial pact to sell as many as 180 turbines to a development that’ll form part of the second wave of projects, he said.

In some of the remote locations, residents also see a chance to prosper.

Wen Maohua, a 61-year-old farmer, was plowing sandy ground at the Kubuqi Desert solar project on a sunny afternoon this spring. He’d been hired to experiment by planting tomatoes, potatoes and melons across about two acres under the vast rows of panels.

While many neighbors are taking up new jobs in the renewables sector, Wen intends to keep farming and seize an opportunity to lease extra land at a low price inside the energy project area. “This year I should be able to make more money,” he said.

A key challenge for Xi’s desert strategy — and for China’s wider adoption of renewables — is whether the nation’s infrastructure can keep pace with the torrent of new solar and wind. A previous, and much smaller, boom in renewables in the middle of last decade resulted in billions of dollars worth of clean energy equipment sitting idle because the grid couldn’t handle the surge in generation.

Some local governments have been limiting solar capacity this year and lowering power rates during daytime hours when photovoltaic generation is at its strongest. China’s rapidly growing battery storage sector, intended to help ensure clean electricity can be reserved to be delivered when it’s needed, is struggling with low utilization rates and safety problems.

Another awkward reality is the still crucial role of coal.

China is continuing to add new coal-fired power stations and last year approved the most new capacity since 2015, according to the Centre for Research on Energy and Clean Air and Global Energy Monitor.

Many new coal facilities, including in Inner Mongolia, are even being constructed alongside the solar and wind arrays.

Beijing says its aim is to provide a potentially rarely-employed backstop for intermittent renewable generation, and to maintain energy security by keeping an option to use its domestically abundant coal. To help encourage the policy, China’s government this month set fees to compensate the fossil fuel plants when they’re left unused.

Xi calls it the principle of “building the new before discarding the old.”

Critics like Greenpeace argue that adding new coal-fired capacity raises risks of higher emissions and diverts spending from alternatives like grid improvements and battery storage.

China burned more coal last year than the rest of the world combined, and relied on the fuel for more than 60% of its electricity generation, the IEA said in a report last month. While the nation’s coal power output will peak around 2025, the speed at which the fuel is relegated to a supporting role remains uncertain, according to the agency.

Even with a world-leading adoption of clean energy, solar and wind currently deliver only about 10% of China’s electricity.

Solar, wind, nuclear and hydro capacity is now at a level where it can meet and eventually outpace growth in energy demand in China, according to Lauri Myllyvirta, lead analyst for CREA. If the tempo of deployments is sustained China’s emissions will fall next year, and potentially “enter into a structural decline,” he said.

In Hangjin Banner, a desert town with a population of about 112,000, officials are preparing to install 12 gigawatts of renewables under the second batch of Xi’s strategy, about the same amount currently installed in all of Denmark.

Developers will first prioritize grid infrastructure, and then add a combination of wind, coal and solar plants that they expect will contribute to global climate action.

“You can drive all the cars you want,” said Li Lijun, head of the local energy administration. “We will be responsible for cutting the emissions from here.”

This still isn’t all the clean energy being added under Xi’s strategy. There’s more to go.



This entry was posted on Monday, November 27th, 2023 at 6:14 am and is filed under China.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

Comments are closed.


ABOUT
WILDCATS AND BLACK SHEEP
Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

Focusing primarily on The New Seven Sisters - the largely state owned petroleum companies from the emerging world that have become key players in the oil & gas industry as identified by Carola Hoyos, Chief Energy Correspondent for The Financial Times - but spanning other nascent opportunities around the globe that may hold potential in the years ahead, Wildcats & Black Sheep is a place for the adventurous to contemplate & evaluate the emerging markets of tomorrow.