In China, the world's largest consumer of coal, the share of coal power in total electricity generation has fallen below half for the first time. The rapid expansion of renewable generation centered on wind and solar is the reason. However, as electricity demand rises due to the spread of electric vehicles (EVs) and the construction of artificial intelligence (AI) data centers, there is a possibility that coal consumption this year will increase from last year even if coal's share declines.
On the 30th (local time), Reuters said China's National Energy Administration (NEA) announced that coal power accounted for 49.7% of total electricity generation in the first half of this year. This is the first time China's coal power share has fallen below 50% on a half-year basis.
China's coal power share dropped 15.8 percentage points to 49.7% in about 10 years from 65.5% in 2016. Over the same period, the share of renewable generation exceeded 40% for the first time, reaching 41.2%. Wind and solar accounted for 24.6% of total electricity production. Compared with 2020 (9.7%), that is an increase to about 2.5 times. The rest of the power came from natural gas and nuclear.
The Chinese government's goal is to raise the share of wind and solar to 30% by 2030. Gao Yuhe, East Asia project manager at Greenpeace, projected the target could be achieved by 2028, helped by wider adoption of rooftop solar and battery energy storage systems (ESS). Gao said, "ESS, demand response (DR), and a flexible power market will further boost the spread of distributed solar and help meet rising electricity demand with renewables instead of fossil fuels."
However, the industry's view is that a decline in coal's share does not necessarily mean a decline in coal consumption. With electricity demand growing quickly due to wider EV adoption and an increase in AI data center construction and exports, coal consumption this year could rise from last year.
China holds abundant coal reserves, but it is also considered a country with heavy coal use, importing about 500 million tons (t) of coal last year. Domestic production over the same period reached 4.83 billion t. If China's coal power share continues to fall, it is expected to affect major coal exporters such as Indonesia, Mongolia, Australia, and Russia. However, actual import volumes will likely be dictated by the price gap between Chinese coal and imports.