[smart grid market research] china electricity profile, zpryme smart grid insights, december 2011

Zpryme Smart Grid Insights Presents:

China: Electricity Profile What implications will the dramatic shift in China‟s electricity

cocktail have for the United States and rest of the world?

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December 2011

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1 www.zpryme.com | www.smartgridresearch.org Zpryme Smart Grid Insights | December 2011


China Electricity Profile: What implications will the dramatic shift in China‟s electricity cocktail have for the United

States and rest of the world?

“Coal price growth

has outpaced state

[China] set electricity

tariffs… Electricity

output is falling back

on coal generation's

slow down.”

Quote: Ric Deverell, Credit Suisse

Source: Bloomberg, Dinakar Sethuraman, Coal Demand Hurt in China by Low Power Rates, November 18, 2011











China’s Electricity Profile at a Glance

According to the International Energy

Agency‟s World Energy Outlook 2011 by

2015 China will overtake the U.S., and

become the leader in total electricity

generation capacity. What‟s more, by

2035 China will consume nearly 70%

more energy than the United States... From phasing out incandescent light bulbs within five years

to optimizing the country's clean energy mix, what‟s

extraordinary about China‟s electricity infrastructure is the

speed and scale of its expansion. The solar, wind, coal,

hydro, and related renewable technology and generation

is galloping at a champions pace, surpassing the U.S. and

rest of the world. For example, China has now become the

new world leader in wind power, having overtaken the

U.S., with 40.2 GW (just three years earlier China‟s 2020

wind deployment goal was set at 30GW, currently it‟s a

mighty 200GW) while attracting the highest new financial

investments for two years in a row with $49 billion USD in

renewables, i.e. about a third of total global investments

(since August 2010 China continues to be the most

attractive country for renewable investment, followed by

U.S., Germany, India and Italy).

To meet this electricity cocktail, the Chinese government

has outlined major plans and dedicated billions to

research, design and build a nationwide Smart Grid.

Zpryme projects the total value of China‟s Smart Grid









market to rise from $22.3 billion USD in 2011 to $61.4 billion

USD in 2015, an annual growth rate of 29.1 percent over

five years (see figure 1).1

Driving the Chinese Smart Grid initiative are technologies

in spaces such as solar. Since the Chinese government

announced the “Golden Sun” initiative in 2009 it‟s led in

solar investment. Still, the Asian nation is starting to feel the

dampness of the solar bubble; more recently, losses for

China‟s largest solar manufacturers, including Suntech

Power Holdings Co. and JA Solar Holdings Co. may

continue through next year.2

On the other side of the energy coin, it‟s no surprise that

the world‟s leading emitter of greenhouse gases still relies

overwhelmingly on coal (consuming 3.5 times as much

coal as the U.S.). Demand for coal in China could be

1 Zpryme Smart Grid Insights, China: Rise of the Smart Grid, January 2011. 2 BusinessWeek, Christopher Martin and Zachary Tracer, China Solar Makers Face

„Suicidal‟ Prices on Excess Output, November 25, 2011.

muffled next year as domestic electricity producers may

pay higher rates to import the fuel to develop power and

net generous year over year returns. Not helping the

economic energy situation, power providers in China are

struggling to recoup their costs as governments restrict

prices to curb inflation, reducing the incentive to boost

electricity generation from thermal coal. China may have

to slow imports of the fuel next year after increasing

shipments by about 10 percent this year, according to the

China Coal Transport and Distribution Association.3 To

combat this, China is working diligently to build more, but

cleaner, coal-fired power plants to meet the demand. The

U.S. is also expected to demand more energy, but is

starting with a smaller base of coal-fired generation

(dissimilar to China, many of the older U.S. coal-fired units

are expected to be driven out of the energy pool in the

two decades).4

What’s Next for China?

On January 18, 2011, the U.S. DOE (Department of Energy)

released a report detailing the substantial progress made

to date on a number of clean energy initiatives between

China and the U.S. Since then, China has been wedged

by negative global economic trends; however the China

Electricity Council still projects an increase in electricity

consumption of 8.5% per year.5 The Smart Grid coupled

with next-gen technologies in spaces such as wind will

3 Jakarta Globe (originator: Bloomberg), Coal Prices Not Likely to Recover in 2012 As

China, India May Limit Purchases, November 27, 2011. 4 E&E Publishing, Joel Kirkland, U.S. and China strive for fruitful but competitive

developments in clean technology, November 29, 2011. 5 The China Electricity Council said in late October 2011 that China‟s electricity

consumption growth would continue to slow during the rest of this year as the

government is making efforts to save energy and cut emission.

$17.1 $22.3

$30.1

$39.2

$49.6

$61.4

$0

$10

$20

$30

$40

$50

$60

$70

2010 2011 2012 2013 2014 2015

Projected China Smart Grid Equipment & Technology Market

2010 - 2015 | in U.S. billions | CAGR = 29.1% Figure 1, Source: Zpryme









offer a unique paradox for a nation that has not even

skimmed the surface of both emitting greenhouse gasses

and clean-tech preeminence. With Chinese government

cooperation, foreign companies that are quick to

penetrate this market will find that 2012 is the year their

brand become synonymous with the Smart Grid.

Key China Electricity Profile Findings

From 2010 to 2015, world total electricity generation

capacity is projected to increase by 284 GW, from

4,623 GW to 4,907 GW, respectively. During this time

period, China will account for 63% (179 GW) of the

world‟s increase in generation capacity. From 2010

to 2035, China is projected to account for 39% of the

world‟s increase in generation capacity.

By 2015, China will overtake the U.S., and become

the leader in total electricity generation capacity.

By 2035, China will account for a quarter of the

world‟s electricity generation capacity. By 2035, China will account for nearly half (49%) of

the world‟s coal fired generation capacity at 1,043

GW. By 2015, China will lead the world in the hydro and

other renewable electricity generation, accounting

for 21% (248 GW) of world capacity. This figure is

projected to reach 24% (581 GW) by 2035.

China‟s wind generation capacity will grow by

1200% from 2010 to 2035, reaching 533 GW by 2035.

LEARN MORE: please see the next several pages for

China projection totals on: electric generating

capacity, coal, renewable, hydro, wind, and solar.









China Electricity

Projections for

Total: electric generating

capacity, coal, renewables,

hydro, wind, and solar.










Total Electric Generating Capacity

Coal Fired Generating Capacity

1,049 1,075 1,085 1,119 1,170 1,221

976 1,118 1,313 1,492 1,666 1,817

4,907 5,312

5,796 6,269

6,769 7,272

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2010 2015 2020 2025 2030 2035

Projected Total Generating Capacity (GW)

2010 - 2035 Figure 2, Source: EIA International Outlook, 2011

United States China World

21% 20% 19% 18% 17% 17%

20% 21% 23% 24% 25% 25%

59% 59% 59% 58% 58% 58%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2015 2020 2025 2030 2035

Percent of World Generating Capacity


ROW

China

United

States

322 322 323 326 329 334

670 695 733 848

962 1,043

1,627 1,646 1,677 1,810

1,968

2,129

0

500

1,000

1,500

2,000

2,500

2010 2015 2020 2025 2030 2035

Projected Coal Fired Generating Capacity (GW)



20% 20% 19% 18% 17% 16%

41% 42% 44% 47% 49% 49%

39% 38% 37% 35% 34% 35%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2015 2020 2025 2030 2035

Percent of World Coal Generating Capacity


ROW

China

United

States












Hydro and Other Renewable Generating Capacity

Wind Generating Capacity

157 179 184 194 201 205 248 330

456 494 532 581

1,300

1,578

1,890

2,054 2,209

2,372

0

500

1,000

1,500

2,000

2,500

2010 2015 2020 2025 2030 2035

Projected Renewable Generating Capacity (GW)



12% 11% 10% 9% 9% 9%

19% 21% 24% 24% 24% 24%

69% 68% 66% 67% 67% 67%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2015 2020 2025 2030 2035

Percent of Renewable Generating Capacity


ROW

China

United

States

38 51 51 54 55 57 31

62 99

119 139

156 180

293

398

456

496 533

0

100

200

300

400

500

600

2010 2015 2020 2025 2030 2035

Projected Wind Generating Capacity (GW)



21% 17% 13% 12% 11% 11%

17% 21% 25% 26% 28% 29%

62% 61% 62% 62% 61% 60%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2015 2020 2025 2030 2035

Percent of Wind Generating Capacity


ROW

China

United

States












Solar Generating Capacity

3 9 11 11 12 13

1 7

18 19 20 21 25

62

86

97

106

119

0

20

40

60

80

100

120

2010 2015 2020 2025 2030 2035

Projected Solar Generating Capacity (GW)



12% 15% 13% 11% 11% 11%

3% 11%

21% 20% 19% 18%

85% 74%

66% 69% 70% 71%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2015 2020 2025 2030 2035

Percent of Solar Generating Capacity


ROW

China

United

States










Zpryme Credits Editor

Robert Langston

Managing Editor

Sean Sayers

Research Lead

Stefan Trifonov

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