Energy & Chemicals Industry Analysis

Overview of Power Generation in China

Power generation by sources of energy in China in 2016

In 2016, thermal power plants constituted the largest share in the power generation mix in China, accounting for approximately 71.6% of the total national power generation. Hydropower takes the second highest share, accounting for approximately 19.7% of the total power generation. Of the thermal power generation fleet in China, combined heat and power generation is an important sub-segment. In 2014, combined heat and power (“CHP”) generation capacity in China reached approximately 280.1 GW, accounting for approximately 30.3% of the total installed capacity of all thermal power plants. According to the 13th Five-year Plan for Power Sector Development, the total CHP capacity is expected to reach 300.0 GW in 2020. Considering the higher overall thermal efficiency of CHP facilities compared to conventional power generation facilities and the rising public demand for cleaner power and heat generating sources to mitigate the serious air pollution in Northern China during the heating supply season, there is ample room for further deployment of CHP facilities. In addition, with the recent joint release of the Administrative Measures for Cogeneration by the NDRC, the NEA, the MOF, the MOHURD and the MEP in March 2016, which reaffirmed the importance of CHP facilities in concentrated heating and electric supply, more new CHP facilities are expected to be established in the near future and further plans to renovate existing power plants to cogeneration plants in Northern China will proceed further as well.


In 2016, the total thermal power generation in China reached 4,288,600.0 GWh. Coal-fired power generation contributed approximately 71.6% of the total power generation. Other thermal power sources accounted for approximately 6.4% of the total power generation, including (i) natural gas; (ii) fuel; (iii) waste heat, waste gas, waste pressure power generation; (iv) crop stalk, bagasse and forestry residue based power generation; and (v) waste incineration power generation.


Power Generation and Supply in China

The growth of power generation industry in China has been strong due to rapid economic growth in China in recent years. The total national installed capacity in China increased from 1,062.5 GW in 2011 to 1,645.8 GW in 2016, at a CAGR of 9.2%, and the national electricity generation increased from 4,730.6 TWh to 5,989.7 TWh, at a CAGR of 4.8%. The total demand of electricity increased from 4,702.2 TW in 2011 to 5,919.8 TW in 2016, at a CAGR of 4.7%. Coal-fired electricity generation remained the key source of energy generation in China. From 2011 to 2016, total installed capacity of coal-fired electricity generation grew from 768.3 GW to 1,053.9 GW. However, the share of coal-fired installed capacity in the total national installed capacity dropped from 72.3% in 2011 to 64.0% in 2016, which reflected the government’s efforts to replace coal-fired electricity generation by other clean and renewable energies.


Future trends of the power generation and supply industry in China

Given the national policy goals of energy conservation, low carbon development and further improvement of overall efficiency of power generation plants in China, it is expected that clean power sources will take greater share in the power generation mix in China. While the share of renewable energy in China’s power generation mix will greatly expand, the cornerstone of the power generation sectors in China is still and will be dominated by the coal-fired power plants. The CHP plants, due to high thermal efficiency and environmental friendliness in providing both electricity and heating, will continue to grow in providing cleaner source of electricity and heating compared to conventional boilers.

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