China's electric power industry is the world's largest electricity

producer, passing the United States in 2011 after rapid growth since the

early 1990s.

Most of the electricity in China comes from coal, which accounted for

66% of the electricity generation mix in 2016. Coal-fired electricity

production declined from 2013 to 2016 coinciding with a major boom in

renewable energy, and a decline in GDP growth. China's coal powered

generating capacity is expected to increase to 1300 GW by 2020, from

960 GW in 2016, despite official plans to limit that growth to 1100 GW.

China has two wide area synchronous grids, the State Grid and the

China Southern Power Grid. The northern power grids were synchronized

in 2005. Since 2011 all Chinese provinces are interconnected. The two

grids are joined by HVDC back-to-back connections.

China has abundant energy with the world's third-largest coal reserves

and massive hydroelectric resources. There is however a geographical

mismatch between the location of the coal fields in the north-east

(Heilongjiang, Jilin, and Liaoning) and north (Shanxi, Shaanxi, and

Henan), hydropower in the south-west (Sichuan, Yunnan, and Tibet), and

the fast-growing industrial load centers of the east (Shanghai-Zhejiang)

and south (Guangdong, Fujian).

Generating capacity by source in China as of 2016 & Electricity

generation by source in 2016

History
In April 1996, an Electric Power Law was implemented, a major event

in China's electric power industry. The law set out to promote the

development of the electric power industry, to protect legal rights of

investors, managers and consumers, and to regulate generation,

distribution and consumption.

Before 1994 electricity supply was managed by electric power bureaus

of the provincial governments. Now utilities are managed by corporations

outside of the government administration structure.

To end the State Power Corporation's (SPC) monopoly of the power

industry, China's State Council dismantled the corporation in December

2002 and set up 11 smaller companies. SPC had owned 46% of the

country's electrical generation assets and 90% of the electrical supply

assets. The smaller companies include two electric power grid operators,

five electric power generation companies and four relevant business

companies. Each of the five electric power generation companies owns

less than 20% (32 GW of electricity generation capacity) of China's

market share for electric power generation. Ongoing reforms aim to

separate power plants from power-supply networks, privatize a

significant amount of state-owned property, encourage competition, and

revamp pricing mechanisms.

It is expected that the municipal electric power companies will be

divided into electric power generating and electric power supply

companies. A policy of competition between the different generators will

be implemented in the next years.

South China from the Changjiang valley down to the South China Sea

was the first part of the economy to liberalize in the 1980s and 1990s and

is home to much of the country's most modern and often foreign-invested

manufacturing industries. Northern and north-eastern China's older

industrial base has fallen behind, remains focused on the domestic

economy and has suffered relative decline.

In recent history, China's power industry is characterized by fast

growth and an enormous installed base. In 2014, it had the largest

installed electricity generation capacity in the world with 1505 GW and

generated 5583 TWh. China also has the largest thermal power capacity,

the largest hydropower capacity, the largest wind power capacity and the

largest solar capacity in the world. Despite an expected rapid increase in

installed capacity scheduled in 2014 for both wind and solar, and

expected increase to 60 GW in nuclear by 2020, coal will still account

between 65% and 75% of capacity in 2020.

In Spring, 2011, according to The New York Times, shortages of

electricity existed, and power outages should be anticipated. The

government-regulated price of electricity had not matched rising prices

for coal.

Production and capacity

Electricity production in China (TWh)
Transmission infrastructure
The central government has made creation of a unified national grid

system a top economic priority to improve the efficiency of the whole

power system and reduce the risk of localised energy shortages. It will

also enable the country to tap the enormous hydro potential from western

China to meet booming demand from the eastern coastal provinces. China

is planning for smart grid and related Advanced Metering Infrastructure.

Ultra-high-voltage transmission

The main problem in China is the voltage drop when power is sent

over very long distances from one region of the country to another.

Long distance inter-regional transmission have been implemented by

using ultra-high voltages (UHV) of 800 kV, based on an extension of

technology already in use in other parts of the world.

Sources
Coal power

China is the largest producer and consumer of coal in the world and is

the largest user of coal-derived electricity. However, since 2014 coal as a

percentage of the energy mix has fallen, declining from 64% in 2015 to

62% in 2016 according to the National Bureau of Statistics.

Domestic coal production has declined even further, dropping 9% year

on year in 2016.[26] Further declines in production were announced in

July 2016 when the commission in charge of state-owned enterprises,

SASAC, ordered companies under its supervision to cut coal mining

capacity by 10% in 2 years and by 15% in 5 years.

An operating power plant in China, 2005

Despite the cuts to coal production and falling percentage of coal in the

energy mix, electricity consumption is expected to grow by 3.6-4 percent

over 2016 to 2020 according to the Thirteenth Plan (2016–2020).

According to the same five-year plan, coal power capacity will be

expanded from 960 GW to under 1,100 GW by the end of 2020 to meet

some of the continued growth in electricity demand. Indeed, in the first

two months of 2016, China had added 22 GW of capacity, 14 GW of

which was coal, according to the China Electricity Council. To curtail the
continued rapid construction of coal fired power plants, strong action was

taken in April of the same year by the National Energy Administration

(NEA), which issued a directive curbing construction in many parts of the

country. This was followed up in January 2017 when the NEA canceled a

further 103 coal power plants, eliminating 120 gigawatts of future

coal-fired capacity, despite the resistance of local authorities mindful of

the need to create jobs. 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.

Hydropower

Hydroelectricity is currently China's largest renewable energy source

and the second overall after coal. China's installed hydro capacity in 2015

was 319 GW, up from 172 GW in 2009, including 23 GW of pumped

storage hydroelectricity capacity. In 2015, hydropower generated 1,126

TWh of power, accounting for roughly 20% of China's total electricity

generation.

Due to China's insufficient reserves of fossil fuels and the

government's preference for energy independence, hydropower plays a

big part in the energy policy of the country. China's potential hydropower

capacity is estimated at up to 600 GW, but currently the technically

exploitable and economically feasible capacity is around 500 GW. There

is therefore considerable potential for further hydro development. The

country has set a 350 GW capacity target for 2020.

Hydroelectric plants in China have a relatively low productivity, with

an average capacity factor of 31%, a possible consequence of rushed

construction and the seasonal variability of rainfall. Moreover, a

significant amount of energy is lost due to the need for long transmission

lines to connect the remote plants to where demand is most concentrated.

Although hydroelectricity represents the largest renewable and low

greenhouse gas emissions energy source in the country, the social and

environmental impact of dam construction in China has been large, with

millions of people forced to relocate and large scale damage to the

environment.

The Three Gorges Dam is the largest power station (of any kind) in

the world by installed capacity, with 22.5 GW

 Wind power

With its large land mass and long coastline, China has exceptional

wind resources: it is estimated China has about 2,380 GW of exploitable

capacity on land and 200 GW on the sea. At the end of 2014, there was

114 GW of electricity generating capacity installed in China, more than

the total nameplate capacity of China's nuclear power stations, (although

capacity of wind power is not on par with capacity of nuclear power) and

over the year 115,000 gigawatt-hours of wind electricity had been

provided to the grid. In 2011, China's plan was “to have 100 gigawatts

(GW) of on-grid wind power generating capacity by the end of 2015 and

to generate 190 billion kilowatt hours (kWh) of wind power annually”.

Wind farm in Xinjiang, China

 China has identified wind power as a key growth component of the

country's economy; researchers from Harvard and Tsinghua University

have found that China could meet all of their electricity demands from

wind power through 2030.

Nuclear power

In terms of nuclear power generation, China will advance from the

moderate development strategy to accelerating development strategy.

Nuclear power will play an even more important role in China's future

power development. Especially in the developed coastal areas with heavy

power load, nuclear power will become the backbone of the power

structure there. China has planned to build up another 30 sets of nuclear

power generator within 15 years with total installed capacity of 80 GWs

by 2020, accounting for about 4% of China's total installed capacity of

the electric power industry. This percentage is expected to double every

10 years for several decades out. Plans are for 200 GWs installed by 2030

which will include a large shift to Fast Breeder reactor and 1500 GWs by

the end of this century.

Solar power

China is the world's largest market for both photovoltaics and solar

thermal energy. Since 2013 China has been the world's leading installer of

solar photovoltaics. Solar PV in China is a growing industry with over

400 companies. In 2015, China became the world's largest producer of

photovoltaic power, narrowly surpassing Germany. By the end of 2016,

total PV capacity had increased to over 77.4 GW, and in 2017 China was

the first country to pass 100 GW of cumulative installed PV capacity. The

contribution to the total electric energy production remains modest as the

average capacity factor of solar power plants is relatively low at 17% on

average. Of the 6,412 TWh electricity produced in China in 2017, 118.2

TWh was generated by solar power, equivalent to 1.84% of total

electricity production.

Solar water heating is also extensively implemented, with a total

installed capacity of 290 GWth at the end of 2014, representing about

70% of world's total installed solar thermal capacity. The goal for 2050 is

to reach 1,300GW of Solar Capacity. If this goal is to be reached it would

be the biggest contributor to Chinese electricity demand

Companies
Major players in China's electric power industry include:

The five majors, and their listed subsidiaries: The five majors are all

SOEs directly administered by SASAC. Their listed subsidiaries are

substantially independent, hence counted as IPPs, and are major power

providers in their own right. Typically each of the big 5 has about 10% of

national installed capacity, and their listed subsidiary an extra 4 or 5% on

top of that.

• China Datang Corporation

 parent of Datang International Power Generation Company (SEHK:

991; SSE: 601991)

• China Guodian Corporation ("Guodian")

parent of GD Power Development Company (SSE: 600795),

• China Huadian Group

parent of Huadian Power International Co., Ltd.

• China Huaneng Group

parent of Huaneng Power International (NYSE:HNP)

• China Power Investment Corporation ("CPI")

parent of China Power International Development Limited ("CPID",

2380.HK)

Additionally two other SOEs also have listed IPP subsidiaries:

• the coalmine owning Shenhua Group

parent of China Shenhua Energy Company (SEHK: 1088, SSE:

601088)

• China Resources Group ("Huarun")

parent of China Resources Power Holdings Company Limited ("CRP",

SEHK: 836)

Nuclear and hydro:

• China Three Gorges Corporation

• China Guangdong Nuclear Power Group

• China Yangtze Power (listed)

Grid operators include:

• State Grid Corporation of China

• China Southern Power Grid