China’s Utility Solar Challenge

Earlier this month, SaurEnergy tracked how China’s Rooftop Solar capacity saw an incredible 55 GW additions in 2022. This was out of a total 87 odd GW of solar capacity added in 2022.

While that article delved into just how Chinese authorities managed to ensure such high success with rooftop solar, and some possible reasons why, today, we will look at another interesting take away from the whole story. Namely, is China facing challenges with utility scale solar? And are the issues the same as most other parts of the world, related to land, transmission costs and consumption of energy? The short answer, yes.

Before we go further, readers will be possibly surprised to know that in China, just 13% of its vast land area is considered arable, or fit for agriculture. For context, the same figure in India is closer to 52%. However, all that agricultural land is also where China’s population is concentrated. Thus, land in eastern and central China to an extent is where an overwhelming majority of Chinese live. Thus, 44% of its population of 1.4 billion lives close to the coastal regions, which are also fed by some of its biggest rivers. Overall, over 80% of the population inhabits these more ‘fertilie’ areas. That led to some of the strictest restrictions on diverting agricultural land for other purposes by the central government, which has placed food security at the top of its priorities. It is these same rules that ensure it is very tough to find parcels large enough for massive solar plants today.

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That means a serious effort to convince local government, farmers and other stakeholders to put up large, utility scale plants in these eastern and central regions of the country. Keep in mind that this is an economy where construction is a key pillar of employment and the economy at all times, and revenues from land sales and taxes is vital for local governments in these regions.

That means, large, utility scale plants have to compete with scarce agricultural land. Thus, the government tried to make China’s north and North West regions, covering provinces like Quinghai, Xinjiang, Shaanxi etc the base for large industries accordingly, to ensure these ‘frontier’ provinces had enough people living there. In that effort, it has been only partly successful. That has meant that the idea of setting up massive utility scale solar plants in these regions can only work up to a point, unless local demand rises in sync.

Transmitting power from these distant plants to the other end of the country does a lot to increase the cost of landed power. Somewhat like the Indian government’s plans for a massive solar plant at Ladakh, for which it has had to put up support in terms of transmission infrastructure finally to make the project move. Despite that, with plans to build almost 450 GW in the cold Gobi desert and surrounding regions, success in ‘colonising’ these lands for solar is vital for overall targets.

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The north and north west regions are also relatively inhospitable, raising the costs of personnel, maintainance etc significantly.

However, there is much in favour too. While high transmission costs is a drag, a massive advantage is that companies across the solar supply chain, many of whom are based in these regions. From Longi Energy to polysilicon manufacturers in Xinjiang. That cuts down on logistics costs in many cases.

China’s total wind and solar capacity target is 1,200 GW by 2030, along with a pledge to cap its carbon emissions by 2030, and generate 50% of energy from renewable sources by 2030.

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