Dropping curtailment rates in line with a reduction of grid bottlenecks – in particular for inland provinces – will likely lead China’s wind generation capacity more than doubling through 2028, Fitch Solutions said in its latest outlook on the wind power sector Asia’s largest economy.
The researchers caution that a transition to subsidy-free renewable energy by 2021 in China is contingent on projects being integrated to the grid.
“Our expectations is that steady improvements in curtailment rates will mean that subsidy-free projects will have better access to the grid and be able to sell their electricity more effectively,” the report adds.
Improved integration will also unlock more development in China's inland provinces - notably Inner Mongolia, Xinjiang and Gansu – which Fitch Solutions had already said are also likely to see more utility-scale solar developments.
Project development in these provinces will support Chinese efforts to ensure wind power generation can compete on an even basis with coal in China, given that their favourable natural conditions will support cost-competitive projects.
China’s renewable market had grown from 15GW in end-2018 to more than 370GW at the end of 2008, Fitch Solutions said, but transmission investment failed to keep pace. That had led to wind power curtailment rates in the inner provinces as high as 43% (in Gansu) in 2016.
According to Daine Loh, power and renewables analyst at Fitch Solutions, China’s wind power capacity stood at about184.3GW at the end of 2018, and is forecast to reach 414.7GW by 2028.
Since 2016, the country has been taking decisive steps to reduce grid bottlenecks – through the deployment of “a plethora of ultra-high-voltage (UHV) transmission lines that connect surplus power generation provinces (often inland) with power consumption hub provinces (often coastal),” the researchers point out.
As a consequence, curtailment rates in the inner provinces have fallen to between 10% and 23%, and for the whole of China to 7%.
“Given our expectation that wind generation curtailment rates will drop further, we believe inland provinces will become more attractive for wind power investment,” the report said.
“While Xinjiang and Gansu were banned from China's first unified bidding round for solar power in 2019 due to continued curtailment, we believe these regions will become competitive for renewables investment as grid bottlenecks are reduced further.”
“Given their favourable natural conditions for wind power and land availability, we believe these provinces will be able to support cost deflation for wind technology to the extent it undercuts China's coal electricity benchmark tariffs, thus becoming subsidy free.”
That development is slated to include Inner Mongolia, which remains the country’s largest provincial wind power market with 29GW in installed capacity at the end of 2018, Fitch Solutions predicted.
Xinjiang, Hebei and Gansu are the next biggest markets in the country, with 19GW, 14GW and 13GW of installed wind power capacity respectively, Fitch Solutions said.