BMI View: The ongoing economic slowdown in China and the government's continued efforts to tackle coal consumption are having a significant impact on China's power sector and we have adjusted our forecasts accordingly. We believe coal-fired power generation will undergo a decline over 2016 and 2017, and then register only slight annual increases thereafter. The outlook for power consumption is similarly muted, with annual average growth rates of 3% between 2016 and 2025, as China's economy shifts away from power-intensive manufacturing.
|e/f = BMI estimate/forecast. Source: GWEC, BMI|
|Generation, Total, TWh||5,393.273||5,412.711||5,428.266||5,590.212||5,794.229||6,001.241||6,201.549|
|Consumption, Net Consumption, TWh||5,010.5||5,033.0||5,050.6||5,267.8||5,478.5||5,681.2||5,882.9|
|Capacity, Net, MW||1,497,486.8||1,594,276.2||1,707,550.0||1,798,301.4||1,889,764.2||1,987,386.1||2,081,806.4|
Latest Updates And Structural Trends
In terms of fuel mix, conventional thermal sources play a key role and are expected to continue to dominate electricity generation as many projects under construction or planned will use coal or gas, and as Chinese efforts in prospecting and exploiting conventional oil and gas resources are set to increase. While other sources of power will play increasingly important roles, China will remain reliant on coal for its power generation over the next decade.
China's power mix continues to evolve, in line with the slowdown in China's economy - which is curbing power consumption - and the ongoing efforts by the Chinese government to tackle pollution, which is resulting in reduced coal consumption. This, coupled with the gain in prominence of cleaner fuels, such as gas, nuclear power and renewable energy, is having a significant impact on China's power sector. Over our forecast period, we expect coal-fired power generation to register just a 2% increase from 2015 to 2025, while other fuels will post much higher growth levels - albeit from a lower base. Natural gas and nuclear power will both increase by over 300% and non-hydro renewables will more than double. Oil power will decline as it is gradually phased out of the power mix over the next decade.
The Chinese government's mandate and environmental regulations will drive consolidation in the country's coal industry over the coming years, 80% of which were loss-making in 2015. On January 21 2016, China announced the allocation of 30bn Chinese Yuan (USD4.56bn) in funds over the next three years to support the closure of 4,300 small and inefficient coal mines to reduce annual production capacity by 700mn tonnes (mnt). This builds forth on the government's plan to redeploy about 1mn workers affected in the consolidation efforts. The newly announced measures, aimed to shrink oversupply and environmental pollution, follows China's decision last month to halt the approval of new coal mines until at least 2019.
China's role in regional power markets across the world will continue to expand over 2016, with both developed and developing markets targeted for investment. Chinese companies will be most active in the coal, hydropower, nuclear and renewables equipment industries, gaining market share in these sectors.
Our view that China will maintain its position as the fastest growing and largest market, in terms of installed renewables capacity globally, remains in play. Capacity installations continue to soar and the government remains strongly committed to expanding its domestic renewables industry, in line with the government's energy diversification strategy. According to our non-hydro renewables capacity forecasts, China will dominate the global renewables market, contributing over 30% to the global total in 2025, with almost triple the installed capacity of the world's second largest market, the US.
The China Power Report features BMI Research's market assessment and independent forecasts covering electricity generation (coal, gas, oil, nuclear, hydro and non-hydro renewables), electricity consumption, trade, transmission and distribution losses and electricity generating capacity.
The China Power Report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing national and multinational operators by sales, market share, investments, projects, partners and expansion strategies.
- Use BMI's independent industry forecasts for China to test other views - a key input for successful budgeting and strategic planning in the power market.
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BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis, covering power markets, regulatory changes, major investments, projects and company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the power sector and within the broader political, economic and business environment.
BMI’s Power Forecast Scenario
Forecasts to end-2024 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:
- Generation: Electricity generation total, thermal, coal, natural gas, oil, nuclear, hydropower, hydro-electric pumped storage and non-hydropower renewables.
- Transmission and Distribution Losses: Electric power transmission and distribution losses.
- Trade: Total imports and exports.
- Electricity Consumption: Net consumption.
- Electricity Capacity: Capacity net, conventional thermal, nuclear, hydropower and non-hydroelectric renewables.
BMI’s Power Risk Reward Index
BMI’s Risk Reward Indices provide investors (power companies, service companies and equity investors) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors,
Structure, size and value of the industry sector; overview of the industry landscape and key players; an assessment of the business operating environment, sustainable energy policies, pricing and the latest regulatory developments.
Key Projects Database
Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by location, sector type, capacity, value, companies and operational status.
Illustration of the power industry that exploits our data-rich, in-depth analysis of the leading players in the sector and examination of operational results, strategic goals, market position and the potential for investment.
Power Outlook long-Term Forecasts
Regional long-term power forecasts covering electricity generation, consumption and capacity for thermal, hydroelectric and nuclear power. These are supported by a country specific overview, alongside an analysis of key downside risks to the main forecasts.
Providing BMI’s near-term economic outlook for the region as a whole, as well as taking a close look at countries of particular interest and the latest trends and developments.
The Power Market Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports, including Energy Information Administration (EIA), World Bank (WB) and United Nations (UN).