China is suffering from a renewable energy ‘Curse of Depreciation’ – Are you floating on it?
Essay by Eric Worrall
According to Bloomberg, China is “cutting back,” eliminating a growing share of its renewable energy production, because its grid can’t cope with the excess production on favorable weather days. profit.
China’s renewable energy fleet is growing too fast for its electricity grid
Curtailment, the scourge of wind turbines and solar panels, is booming again in China
Bloomberg News
June 6, 2022, 13:15 GMT + 10China is wasting more and more clean energy as it adds wind turbines and solar panels faster than its grid system can digest them.
Nearly 12% of the electricity generated by wind turbines in Inner Mongolia this year has been wasted due to grid failure, along with 10% of solar power in Qinghai, Economic Information Daily. report, citing government data. In sunny and windy but sparsely populated Gansu province, the share of wind and solar energy use could fall below 90% this year from nearly 97% in 2021.
While China’s economy is slowing and energy use has something to do with the Covid-19 lockdown, the main culprit is the exploding pace of renewable energy installations. China has set a record for adding wind capacity in 2020 and solar in 2021, and is set to be dual mark it this year.
But unlike piles of coal, you can’t just save the wind and sun when you need it, so all the extra power is generating more electricity than the grid can use and has to be cut off to avoid overload. That’s bad for utility companies that don’t get paid for that power, and bad for the environment because wasted clean energy can reduce emissions from burning coal.
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Cuts are an inevitable consequence of an excess of renewable capacity. Since stored energy is not capable of managing large fluctuations in renewable electricity, on inclement days, excess renewable energy must be removed.
Getting rid of excess renewable energy is wasteful.
Bloomberg goes on to explain how more energy storage and grid capacity would fix the cutback problem, without going into details – this, in my opinion, means they have no idea. in terms of how to actually fix the problem.
Cutting is bad because it adds costs to the end user, as if renewables weren’t expensive enough, because the asset being cut doesn’t generate income. Like a landlord without tenants, renewable investors still have to shoulder the costs when their systems are cut, but they don’t receive the income they would otherwise receive if their systems were up and running. permission to sell electricity to the grid.
Having said that, I don’t know what Chinese investors will do next.
In a rational world, Chinese investors would realize lower-than-expected returns due to cutbacks and “cut off” capital flows to shift to underperforming renewable energy assets. But nothing about the current Chinese market is plausible.
China is grappling with a savings and real estate crisis that threatens to destabilize the country. The CCP’s response is to pour more than 5 trillion dollars of hot stimulus money into the Chinese economy, follow me to try to re-inflate their real estate bubble. If they succeed, real estate isn’t the only bubble that all the hot money that’s being printed will inflate.
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