Caixin
May 18, 2021 06:39 PM
BUSINESS & TECH

Energy Giant Amps Up Strategy to Ditch Fossil Fuels, Boost Renewables

Construction work continues on a hydropower facility on the border between Southwest China’s Yunnan and Sichuan provinces on April 27. Photo: VCG
Construction work continues on a hydropower facility on the border between Southwest China’s Yunnan and Sichuan provinces on April 27. Photo: VCG

China Southern Power Grid Co. Ltd. (SZ:003035), one of the country’s two main power distributors, aims to source two-thirds of its electricity from non-fossil fuels by 2030 under a plan that will also increase its renewable energy capacity by a factor of five.

The state-owned energy giant, also known as CSG Energy, serves around 250 million people in five southern provinces. It will bring its total renewables capacity to 250 gigawatts (GW) by the end of the decade, up from 50 GW last year, according to a company white paper issued Saturday.

The plan means that 65% of the company’s electricity will come from renewable sources, the document says, adding that it will also transform the Shenzhen-listed firm into southern China’s biggest power supplier.

It comes as a succession of Chinese state-owned energy firms pledge to ditch fossil fuels and embrace renewables to realize Beijing’s bold climate commitments. In March, China’s main power distributor, State Grid Corp. of China, said it would significantly increase its wind, solar, nuclear and hydropower capacity over the next 10 years.

CSG Energy’s plan (link in Chinese) would see its renewable energy capacity grow at an average annual rate of 17% in the area it serves, which comprises the provinces of Guangdong, Yunnan, Guizhou and Hainan and the Guangxi Zhuang autonomous region, as well as the special administrative regions of Hong Kong and Macao.

By 2025, the company plans to have added 100 GW of new capacity, including 56 GW of solar power, 24 GW of onshore wind and 20 GW of offshore wind, a small but rapidly growing part of China’s renewables portfolio.

While much of its electricity will continue to be transmitted from generating bases in Yunnan and Guizhou, the firm also intends to bring in up to 20 GW from other regions, including Tibet and parts of northern China that supply the Greater Bay Area in the country’s south.

Additionally, CSG Energy aims to build two new pumped hydropower projects with a combined energy storage capacity of 20 GW in order to respond more effectively to fluctuations in power demand. It had just under 8 GW of pumped hydro in operation at the end of last year.

The shift toward renewables requires flexibility to ensure a “stable, continuous supply of power for our customers,” said Liu Yingshang, CSG Energy’s deputy chief engineer, at a press conference Saturday.

CSG Energy booked net profits of 74.4 million yuan ($11.6 million) in the first quarter, a rise of 18.2% on the equivalent period last year, when China’s Covid-19 outbreak was at its peak, according to its latest earnings report (link in Chinese). The company’s financial disclosures for 2019, well before the pandemic started, were not available online.

Revenue rose 31.1% year-on-year to 452.5 million yuan in the three months through March, the report says. The company’s stock price rose 2.26% on Tuesday to close at 10.4 yuan.

China’s energy sector is in the throes of a once-in-a-generation transition away from fossil fuels, spurred on by the country’s commitment to bringing its carbon dioxide emissions to a peak by 2030 and reducing them to net zero by 2060.

In March, State Grid — by some measures the world’s largest utility company — said it plans to increase its total wind and solar capacity to more than 1,000 GW by 2030, while also bringing hydropower capacity to 280 GW and nuclear capacity to 80 GW, according to the State-owned Assets Supervision and Administration Commission, a body under China’s State Council.

Contact reporter Matthew Walsh (matthewwalsh@caixin.com) and Flynn Murphy (flynnmurphy@caixin.com)

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