Renewable energy has risen to an even more prominent position in China’s 14th Five Year Plan (FYP) (2021-2025) released in March 2021.
It is clear that solar PV and wind power generation would be the main contributor to China’s incremental power capacity for the next decades to come. And both are overtaking hydro to become China’s second-largest power generation source.
As renewable surges to be the dominant energy source, a series of market changes would also occur in other sectors. New opportunities have emerged for new technologies such as utility-scale storage, power-to-gas, smart grid, IT plus energy systems and so on.
Below Energy Iceberg summarized the five critical changes in the national economy Five-Year Plan regarding Beijing’s renewable approaches and their potential impacts.
Wind & Solar the “First” Issue to Address
Both the 13th FYP and the 14th version mentioned renewable (wind, solar PV, CSP, biomass, geothermal), hydro, nuclear, and fossil fuels as part of the solution to “construct a modern energy system.”
A subtle—but perhaps significant— change from the 13th to the 14th plan is Beijing’ sequence addressing the different sectors.
The new plan first addresses wind and solar before moving to hydropower and nuclear. Whereas in the 13th five-year plan, hydro took the first place, followed by wind/solar and then nuclear.
The change in sequence parallels wind and solar’s shifting position in the past five years, as they (especially solar PV) overtook hydropower to become the most significant contributor to China’s new power generation capacity.
The sequence, thus, indicates wind and solar energy to take the absolute centre role in China’s clean energy development.
Renewable: from “Continue Monmentum” to “Extensive Expansion”
Bejing’s rhetoric on how to develop wind and solar also changes.
The 14th FYP pledged to “extensively expand the generation scale/size of wind and solar power,” whereas the older plan said to “continue pushing forward the development of wind and solar.”
The subtle phrasing difference further confirms the leading position of wind and solar in Beijing’s clean energy strategy.
Mega Clean Energy Construction Revamped
The 14th FYP plan calls for constructing a series of mega-size “Clean Energy Complexes”, which integrate different power sources.
The “hybrid energy integration” (多能互补) concept has already appeared in the 13th FYP text, but the concept has certainly raised to a more prominent position in the new FYP.
The change is not at all a surprise. Since late 2019, about four dozens of gigawatt-size hybrid energy “complex” projects have kicked off development, with many more on the way. These projects are typically designed to combine renewable power generations with new storage technologies like utility-scale battery, power-to-gas facility and so on. [For more information of this “Renewable Hybrid” hype, check out our previous analysis on the “Renewable Hybrid” drivers and impacts. ]
The 14th FYP confirms Beijing’s support on such projects–despite of concerns on the impacts of these centralized projects on China’s power market. And the new plan suggests that China would revamp the efforts on constructing mega and centralized renewable bases— a trend that the energy regulator tried to cap during the 13th FYP period (2015-2020).
Regarding centralized energy projects, the rhetoric in the 14th plan is clearly different from that of the 13th. The 13th FYP sets that renewable constructon in the “three northern” regions should be carried out in an “orderly manner,”whereas the 14th FYP basically has green-lighted most of the centralized renewable plans.
- Hydro Projects：Jinsha River Upstream and Downstream, Yapan River, Yellow River Upstream and the Jizi Bay
- Onshore Wind & Solar Projects: Hexi Corridor, Xinjiang, Hebei North, Songliao
- Offshore Wind Projects: Guangdong, Fujian, Zhejiang, Jiangsu. Shandong
Energy Storage a New Priority
The 14th FYP brings forth a new target in terms of power infrastructure development, which is to “enhance the capability of consuming and storing renewable.”
The new requirement reflects the growing shares of renewable in China’s power mix and the looming issue of power curtailment, as Beijing intends to revamp large-scale renewable construction.
Against the backdrop, new technology solutions that help increase renewable distributed consumption and storage face a unique market opportunity in the coming decade. [READ MORE: energy storage a must for offshore wind in China]
Different energy storage technologies—including power-to-gas—are poised to benefit from renewable’s “rise to power.”
Meanwhile, electrification would enjoy a quicker roll out in various industries (heating, mining, manufacturing and so on).
Notably, the 14th FYP mentioned building a series of pump-hydro storage plants, as well as
demonstrations of battery storage, compressed air and flywheel storage.
It is the first time the FYP enlisted these new storage technologies (BESS, CAES, FES) as prioritized energy projects.
Hydrogen Remains as a “Frontier” Area
The new FYP did not weight in too much on the heated hydrogen and fuel cell market. [READ MORE on this topic: China’s regional 14th Five-Year Plans regarding hydrogen energy ]
Both the 13th and 14th FYP have addressed hydrogen as a “frontier” area, where the country pledged to promote.
Nevertheless, in the new economic plan, hydrogen is listed next to Brain-inspired Intelligence, Quantum Information, Deep-sea & Aerospace Exploitation and others as one of the most critical “reformative” sectors.
While in the previous plan, it is only one of the advanced energy solutions—besides the more conventional areas like high efficient wind, solar, biomass and smart grid.
A national strategy for hydrogen development is still expected to launch soon. However, the commercialization of hydrogen & fuel cell in the next years may be mostly driven by local efforts.