China Has 300 GW of Unused Coal Power Capacity But Plans To Build 600 GW More

China just stuns your mind with the large numbers that are bandied about. The country has one of the largest coal power capacity in the world with 895 GW of capacity existing around China. However, most of the capacity lies idle as power growth has decreased to just 3% from the around 10% earlier. Two big drivers are at work in reducing overall power demand in China:

1) Increasing energy efficiency

2) Reducing economic growth

Also read Despite Trump, Coal Is On Its Way To An Excruciating And Inexorable Global Death

The trend seems unlikely to change as China moves from a industrial heavy country to a more services led economy in the future. But its state directed capitalism is leading to adversce consequences for its people as well as global citizens, affected by global warming and climate change. Despite massive amounts of unused capacity, China is building around 2 new coal power plants every week with 200 GW of coal power plants under construction and another 400 GW in the planning state. This makes little sense given that almost 50% of the thermal power capacity is not getting used at all. China’s lopsided economic model with low financial rates and huge investments are creating chaos for the country’s energy sector. Low renewable energy prices have made coal and gas capacity in developed countries almost redundant except for providing balancing and base load services. New capacity in coal and gas may become a “stranded investment” going forward, given the steep decline in wind and solar prices going forward.

It makes little sense for China to build so much coal power plants given that it still has to absorb the existing capacity. Even for future these investments may turn into non performing assets as solar and wind prices may further decrease the demand for power, leading to no buyers of electricity. Solar plus energy storage could lead to many consumers completely backing out of the grid going into the future. China needs to carefully think its coal gameplan for the future as it risks losing almost half a trillion dollars as per Greenpeace. Unlike some of the more radical ideas given by Greenpeace, I agree with their idea that China should sharply reduce their new investments into this relic of the industrial age.