The year 2018 marked the 40th anniversary of China’s historic economic reform programme, which introduced market principles and opened up the economy to foreign investment. Since these important reforms, China’s hydropower sector has grown twenty-fold to a total capacity of 352 GW, representing over a quarter of the world’s installed capacity. A further 8.54 GW capacity was added last year, including 1.5 GW of pumped storage.
In recent years, annual capacity growth has slowed in line with weaker economic conditions and reduced power demand growth, resulting in overcapacity and renewables curtailment. In 2018, 33,200 GWh of wind and solar and 69,100 GWh of hydropower generation was curtailed. To tackle this problem, the Chinese government issued the ‘Clean Energy Consumption Action Plan 2018–2020’ which aims to virtually eliminate curtailment by 2020. The Sichuan provincial government also announced plans to establish a ‘hydropower consumption demonstration zone’ with direct power purchase and dedicated power lines for local industrial users.
Inter-provincial power transmission channels have been constructed to export excess hydropower generation and in 2018, two further transmission lines from Yunnan province achieved significant progress. The 800 kV Northwestern Yunnan-Guangdong UHVDC power transmission project with a transmission capacity of 5,000 MW was commissioned, and the world’s first UHV multi-terminal DC project, the 800 kV Wudongde–Guangdong and Guangxi transmission began construction.
Pumped storage is essential to provide flexibility to the power system and continues to be a priority in China’s energy transition. The 1,200 MW Shenzhen station was commissioned last year and is the country’s first large scale pumped storage built in a city, in addition the 600 MW Qiongzhong station entered into operation. Furthermore, the main civil works of three pumped storage projects (1,200 MW Fu Kang, 1,800 MW Jurong and 1,200 MW Yongtai) began construction in 2018. A number of conventional projects were also commissioned, including 1,900 MW Huangdeng, 348 MW Sha Ping II, 920 MW Dahuaqiao and 420 MW Li Di stations. Meanwhile, substantial progress has been made with the world’s largest hydropower project currently under construction, China Three Gorges Corporation’s (CTG) 16,000 MW Baihetan project, with the completion of intake towers for spillway tunnels.
Apart from advancing infrastructure development, the Chinese government also implemented a series of reforms and policies to speed up their clean energy transformation. In 2018, China began reforming its electricity market to transition from a planned dispatch to an electricity spot market that will allow renewables to be dispatched first, and hydropower is expected to benefit from increased generation. Pilot spot markets, which is the buying and selling of electricity for immediate delivery, are being developed in eight provinces and regions; however, seven of them failed to meet the 2018 deadline and have been postponed and in 2019, the central government will intervene to accelerate their development. Furthermore, ancillary services markets that will better reward the services of pumped storage were successfully implemented in five regional power markets including Northeast China.
In November 2018, the government released its third public consultation on their renewable portfolio standard, which sets out provincial wide minimum consumption levels of renewable electricity. The new standard will require designated electricity users to purchase an obligated amount of renewable energy certificates from renewable energy generators, which will further help to increase hydropower consumption and reduce curtailment.
Finally, China continues to promote green finance for its massive clean energy investment needs. Internationally-aligned green bond issuance reached USD 31.2 billion (CNY 210.3 billion) in 2018, and China’s green bond market is the world’s second largest, accounting for 18 per cent of global issuance. The country’s green bond standards were developed to support the financing of clean energy projects including large-scale hydropower. Between 2017 and 2018, CTG raised USD 2.25 billion to finance its Jinsha River cascade projects, including the Baihetan and Wudongde hydropower projects.
This country profile is featured in the 2019 Hydropower Status Report. Download the report: hydropower.org/statusreport
This profile was last updated in May 2019.