China's installed coal-based power generation capacity was 1080
GW in 2021,[1] about half the total installed capacity of
power stations in China.[2]Coal-fired power stations generated 57% of electricity in 2020.[3] Over half the world's coal-fired power is generated in China.[4] 5 GW of new coal power was approved in the first half of 2021.[2] Quotas force utility companies to buy coal power over cheaper renewable power.[5] Carbon Tracker estimated in 2020 that the average coal fleet loss was about 4 USD/MWh and that about 60% of power stations were
cashflow negative in 2018 and 2019.[6]
According to 2020 analysis by Energy Foundation China, to keep warming to 1.5 degrees C all China's coal power without carbon capture must be phased out by 2045.[7] But in 2023 many new coal power stations were approved.[8] Coal power stations receive payments for their capacity.[9]
Retirement and addition of coal-fired power capacity
The annual amount of coal plant capacity being retired increased into the mid-2010s.[10] However, the rate of retirement has since stalled,[10] and global coal phase-out is not yet compatible with the goals of the
Paris Climate Agreement.[11]
In parallel with retirement of some coal plant capacity, other coal plants are still being added, though the annual amount of added capacity has been declining since the 2010s.[12]
China is the largest producer and consumer of coal in the world and is the largest user of coal-derived electricity. Despite China (like other G20 countries) pledging in 2009 to end inefficient
fossil fuel subsidies, as of 2020[update] there are direct subsidies and the main way coal power is favoured is by the rules guaranteeing its purchase – so dispatch order is not
merit order.[13]
To curtail the continued rapid construction of coal fired power plants, strong action was taken in April 2016 by the
National Energy Administration (NEA), which issued a directive curbing construction in many parts of the country.[14] This was followed up in January 2017 when the NEA canceled a further 103 coal power plants, eliminating 120 GW of future coal-fired capacity, despite the resistance of local authorities mindful of the need to create jobs.[15] The decreasing rate of construction is due to the realization that too many power plants had been built and some existing plants were being used far below capacity.[16] In 2020 over 40% of plants were estimated to be running at a net loss and new plants may become
stranded assets.[13] In 2021 some plants were reported close to bankruptcy due to being forbidden to raise electricity prices in line with high coal prices.[17]
The
think tankCarbon Tracker estimated the average loss was about US$4/MWh and that about 60% of power stations were
cashflow negative in 2018 and 2019.[18]
In 2020 Carbon Tracker estimated that 43% of coal-fired plants were already more expensive than new renewables and that 94% would be by 2025.[19] According to a 2020 analysis by Energy Foundation China, in order to keep warming to 1.5 degrees C coal plants without carbon capture must be phased out by 2045.[20] A 2021 study estimated that all coal power plants could be shut down by 2040, by retiring them at the end of their financial lifetime.[21]
In 2023
the Economist magazine wrote that ‘ Building a coal plant, whether it is needed or not, is also a common way for local governments to boost economic growth.’ and that ‘ They don’t like depending on each other for energy. So, for example, a province might prefer to use its own coal plant rather than a cleaner energy source located elsewhere.’[22]