China vowed on Tuesday to further promote the development of large-scale and high-quality new energy resources, and build a new power system featuring a gradual increase in the proportion of new energy utilization, which experts believe will further boost the industry's prospects amid the nation's progress toward carbon neutrality.
According to the modern energy system plan under the 14th Five-Year Plan (2021-25) released by the National Development and Reform Commission and the National Energy Administration on Tuesday, China's share of nonfossil energy consumption is to increase to around 20 percent by 2025 and the proportion of nonfossil power generation will be around 39 percent by then.
China's proportion of nonfossil energy in its total energy consumption has been rising steadily in recent years, from 12 percent in 2016－the starting year of the 13th Five-Year Plan period (2016-20)－to 15.9 percent by the end of 2020.
Analysts said that as China aims to peak carbon emissions by 2030 and achieve carbon neutrality by 2060, the new energy industry has broad prospects in the country and some enterprises might be able to rapidly expand their scale.
Luo Zuoxian, head of intelligence and research at the Sinopec Economics and Development Research Institute, said the plan can adequately ensure the country's energy security through optimization of energy distribution, technology empowerment, improving energy governance and international cooperation.
The plan emphasizes supply-side reform and development and sets clear targets for the country's nonfossil fuel energy, Luo said.
"Different from the previous nonfossil target for the entire energy mix, the recently released plan on energy has made a new quantifiable pledge to use 39 percent of nonfossil fuel in the power mix, which makes clear the duties of the power sector companies and prevents any delays in carbon peaking," said Wei Hanyang, a power market analyst at research firm BloombergNEF.
"Apart from offshore wind power, China also encourages natural gas-fired power in some coastal provinces, which, to some extent, eases previous concerns that gas power might be abandoned when China seeks decarbonization goals."
Domestic natural gas production targets are not as ambitious as expected in the newly released plan within the context of improving energy supply security, said Cao Lujia, an analyst with BloombergNEF.
The country's 2025 production target is 230 billion cubic meters annually compared to 205 billion cubic meters in 2021. The estimated average annual growth rate for the 2021-25 period is only 2.9 percent, much lower than the 8.4 percent seen during the 2016-20 period, Cao said.
Regarding storage expansion, China has been continuously putting great efforts into planning and building underground storage, peak-shaving stations and LNG tanks at receiving terminals.
BloombergNEF estimates current storage capacity is below 30 billion cubic meters, which is roughly 7 percent of China's annual consumption. The capacity would need to double in order to reach the 2025 target of 55-60 billion cubic meters, it said.
"Storage capacity is important, as gas is playing a more important role in China's energy mix and is crucial not only seasonally, but potentially also daily, given peak-shaving in the future power system," Cao said.
According to the plan, the country will speed up the construction of decentralized wind power and distributed photovoltaic power in load centers and surrounding areas. Meanwhile, China will also accelerate solar and wind power generation capacity construction in the Gobi Desert and other arid regions amid efforts to boost renewable power consumption, taking advantage of the rich solar and wind resources there.
The government also encourages steady construction of coastal nuclear power projects with an emphasis on security. Installed capacity for nuclear power plants in operation will reach 70 million kilowatts by 2025, it said.
Editor: Kelly
