Wind and solar energy, despite their intermittent output, are already matching or beating the competitiveness of coal-fired power in many regions globally, including parts of China, according to a founder of the nation’s second largest wind turbine maker.
This is partly thanks to increasing deployment of software and infrastructure allowing so-called energy internet of things technology – the combination of smart devices with data analytics – to facilitate smart energy distribution and storage to reduce the overall cost of wind and solar energy.
“The LCOE [levelised cost of energy] will fall further … [perhaps by] a few per cent a year,” Envision Energy group executive director Felix Zhang Lei told the South China Morning Post in a recent interview. “There is no reason to build more coal fired power plants. Globally, in the last two years, more renewable power plants were built than fossil fuel ones.”
LCOE is the average price a power plant must receive for each unit of power sold to break even over its lifetime.
Although coal is abundant and relatively cheap in China, in some parts of the renewable energy rich northern regions, technological advancement means wind and solar power is already as competitive as pollution prone coal-fired power which supplies the lion’s share of the nations power needs.
But due to grid bottlenecks and the intermittent nature of wind and solar power, a portion of the output generated by many wind and solar projects in China is wasted and not sent to the grid, hampering their competitiveness.
Part of the reason for the bottlenecks is the need to transmit excess power in the energy rich but sparsely populated western and northern regions to major consumption centres in central and coastal provinces.
Industry-wide overcapacity in most parts of the country – the worst in more than half a century – was driven by a power plant construction binge over the past few years and slower power demand growth, which did not help in absorbing the excess power generated.
Beijing earlier this month announced China’s first ever batch of approved wind power projects with power prices in parity with coal fired power, as it pursues a goal for all onshore wind projects to be rid of subsidies by 2020.
It guaranteed that all of the approved projects’ output will be bought by the local state owned grid operators, which will bolster their commercial viability despite the lack of subsidies.
China has the world’s largest installed wind and solar power capacity, and is also the largest equipment producer for both.
In July this year Shanghai-based Envision announced the formation of an energy Internet of things alliance with firms including software giant Microsoft and management and technology consultancy Accenture, to make energy generation, distribution and consumption “smart and green”.
This entails interconnecting buildings, industry parks, electric vehicles, power plants, power grids and energy storage devices via digital technology.
“We intend to increase access to and reduce the cost of renewable energy by creating a new energy Internet of things paradigm for wind and solar power generation that is able to meet continuous demand,” Zhang said.
He expects large-scale energy storage devices to be widely commercialised internationally within a decade, which together with smart device-enabled and consumer-driven energy demand management, will further enhance the competitiveness of solar and wind power.
Envision and Goldwind Science&Technology, based in Urumqi in the Xinjiang Uygur autonomous region, together account for almost 60 per cent of China’s wind turbine output.
Set up a decade ago, Envision said its wind and solar asset management applications are managing some 100 gigawatts (GW) of renewable energy generation assets globally, roughly one-eighth the global wind and solar generation capacity combined.
Although China still accounts for the majority of its revenue, in the past two years the company has aggressively pursued projects and invested in companies abroad, including in Chile, Mexico, Argentina, France, India, Australia, Middle East, Sweden and Turkey.
They include the acquisitions of France based wind farm developer Velocita Energy Developments and Norway based renewable energy asset management software firm BazeField Technology.
With sales of over US$2 billion last year, Envision has set up research and development facilities in Germany, Denmark, the United States and China.
Zhang said the company has no plans to go public.
“In the energy sector, we are facing multi-decade challenges and opportunities, so companies need multi-decade business plans and execution. Public companies [often attract] a lot of noise … we do not want to be disrupted by others. Why let other people who are not experts tell you what to do?”