China Electricity Expert Talks Wind, Solar, & Storage In The Country – CleanTechnica

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Last Updated on: 20th February 2025, 12:56 pm

Recently I had the opportunity to sit down with one of the leading experts on electrical generation in China to discuss the absurd scales of all forms of electrical generation and storage. In the first half of our conversation, we talked coal, gas, and nuclear. In the second half — lightly edited transcript below — we talked wind, solar, and storage.

Michael Barnard [MB]: Hi, welcome back to Redefining Energy Tech. I’m your host, Michael Barnard. As always, we’re sponsored by TFIE Strategy, a firm which assists investment funds and firms to pick the winners and avoid the losers in climate solutions. My guest today is David Fishman, senior manager at the Lantau Group and one of the world’s leading experts on what’s happening in China with electrical generation. Join us for the second half of our fascinating conversation.

Okay, so that’s the bad stuff. We’ve talked about coal, we’ve talked about natural gas, the fossil fuels. But now let’s pivot to the holy moly stuff that China has been doing with the other stuff.

I have a soft spot for wind energy.I’ve gone through most domains of major climate problems and when I started electrical generation was one of the ones I started with. I started by looking at wind and understanding everything about wind energy. I’ve got a real soft spot for the space. It’s going to be not eclipsed, but in the end it’s going to be more solar than wind in the global grid. I had to give up on that idea. But tell us about wind energy in China. It’s just such a fascinating story of extraordinary growth and over the past two.

David Fishman [DF]: There’s three kinds of wind that I’ll talk about. One that is pretty mature, one that is maturing and one that is recently emergent that I think is very interesting. So first onshore wind, the mature one. Tons and tons of onshore wind up in the northeast, the north and the northwest. They’ve been building it well since about 2014, 2015, even going before that. But the real big spike came around 2015, 2016. They got into trouble with curtailment at that time. Kind of overbuilt at the moment. The grid wasn’t able to receive that much wind power. They couldn’t operate flexibly. Coal was getting priority in the dispatch queue and kicking wind out, stuff like that. A lot of investors got burnt.

2015, 2016, a lot of foreign investors who had rushed in to build wind in western China and then weren’t getting their subsidies and they sold off all their assets and left swearing to never do China renewable investments ever again. To my understanding, there is at least one investment bank based in Hong Kong which I’ve talked to people at. They say every time I input a new project initiation code in our system and I say that I want to do a renewable project in China, an automated flag pops up that says, have you reviewed the file on 2015, how much money we lost on that wind project in China? Make sure you review that before we continue with this new project. So, you know, they’re aware of it. And then things actually stabilized and tapered off in the last few years.

So the onshore wind in what we call the three norths in China, the Northeast and the Northwest, has really not been as aggressive as I hoped, maybe in the last three years or so. Wind capacity growth has still been healthy, of course, and, but for China, it’s been underperforming, in my opinion, versus what could have been. And that’s because I think they’re looking at some really rough interconnection issues that the capacity build out for has exceeded the infrastructure build out. And that still you’re seeing issues with dispatch not being intelligent or flexible enough to accommodate all of these wind resources coming online in what are essentially barren deserts, right. Places with no load. You have to be able to get them into a line, ideally a UHV line, and send them somewhere else where they’re.

So that’s been the story of onshore wind doing well.

MB: But, but let’s just test this because I hear conflicting stuff. Every year since 2014 I’ve been doing a comparison of nuclear versus wind and solar because it’s just a fascinating variance thing. But what is the actual experience? So what is the degree of curtailment in China these days on the ground as opposed to Western headlines or other stuff?

DF: That’s specifically, at this moment, a very pertinent question. In the last few months especially, everybody I know in the industry here is complaining about curtailment. Everybody says curtailment is high out west, and yet the figures on curtailment coming out at the provincial level do not support that.

MB: What are the figures? I mean, I was on stage in Brussels and I was hearing horror stories about European curtailment. I’m just trying to get actual capacity factor numbers, you know, that are believable and if anybody has them, it’s you.

DF: Officially every province has its own KPIs for curtailment, but they’re supposed to be under 5%. In the last year, several provinces relaxed their requirement and allowed it to go as 10%. Officially no province has higher than 10% curtailment and most of them have no higher than 5% curtailment. Now I believe 100% that is true for the eastern provinces and down south and anywhere that has a large power demand. I have no doubt that they’re wasting very little of their wind power. However yesterday Lauri Myllyvirta at CREA published on what happened in November in China. Why did thermal generation grow in November 2024 in China, even though power demand growth was really small?

It should have been possible for renewables to cover 100% of new power demand growth. How did they not, how did we have all this new capacity that couldn’t meet? It was like 2.2% year on year growth and you couldn’t meet that with all your new renewables. He and I had been talking about that for about a month now, trying to figure it out for a while and I had talked to a bunch of people on the Chinese side too. What everybody came to the conclusion was that the curtailment numbers are just not reflective of reality. The generation numbers are accurate. They’re generating as much power as they said they generate.

This was suggested to me by a friend. I don’t want to say it’s, you know, the absolute word of God here that this is how it’s done. But he said the way that it would be done if he was going to do it was you adjust the availability numbers. Generation numbers are actually generation numbers, but you change the denominator. So you say it was a cloudy day, it was less available. Generation numbers are real and curtailment numbers calculated. They look real too. But maybe you’ve got some local officials, some county level, some municipal officials who are concerned about not meeting their KPIs on managing curtailment.

MB: Let me ask the question. Most people don’t know nearly enough about China. How many provinces are there in China?

DF: You could say China has anywhere from 32 to 36 provinces, depending on what you’re counting as provinces versus special administrative regions. But you know, as we’ll say 30 plus provincial level administrative units.

MB: That’s a good number to start with. It’s around the same as India, but those provinces there are much smaller because it’s a third the land mass. We’re talking about fairly big things. It’s the same land mass as the United States, with 30 sub-national administrative units or so. Are they as weirdly shaped and sized as the United States? Is there a Rhode Island?

DF: Oh yeah, there’s a province called Gansu. If you ever look up the shape of Gansu, it’s determined by some mountain ranges that surround it. And it looks, it’s just like this long skinny banana looking thing with bits jutting out to the side. There are some weird shaped provinces. There aren’t any exceedingly small ones except for Macau and Hong Kong. Then you’ve got Beijing, Shanghai, Tianjin, Chongqing. They’re nationally administered municipalities. There are some oddities there, but for the most part they’re big chunky provinces.

MB: Okay, so 30 or so all the eastern and southern, all the southeastern ones are no curtailment to speak of. So that leaves, you know, maybe 15 or 20 provinces where we’re seeing curtailment between 5 to 10% officially. What do you, what is your, what is the. Take the best guess you have about the actual percentage of curtailment in the 5% provinces. Is it 6% or is it 9%?

DF: It’s actually not even that many provinces. It’s like the United States. As you go out west, the provinces get larger because you’re more sparsely populated. I think I saw in Lauri’s analysis there’s something like seven or eight provinces where things just don’t really add up. This is all anecdotally, but when I’m hearing from people talking about, oh, we can’t sell any power, the, you know, we’re seeing such curtailment rates, they’re talking about numbers like 20 or 25%. So as bad as the days back in 2016, but, you know, no way to verify it. And if individual projects are saying 20%, that doesn’t mean everybody’s getting 20%. It just means that project is seeing 20%.

MB: It’s interesting because once again the standard challenge with China, there’s the official story and then there’s what’s happening on the ground. Sometimes they’re very well aligned and sometimes they’re not.

So that’s the big chunk of onshore stuff. There are greater curtailment problems than are reported. That’s problematic news. That is what it is. What’s the second big chunk of wind energy?

DF: Offshore wind. Pretty much every coastal province in China has a plan for offshore wind. Unfortunately, for the most part, I think their offshore wind development has been slower than expected. Now they all do have huge plans and they are getting started with them and some projects have already been built. But it’s definitely, if you had to pick an area where you say like, wow, it turns out China doesn’t always build renewables faster than we thought they could, I would say offshore wind has maybe been the area where they’ve actually been a little slower, a little bit slower than expected. Just about every coastal province has between 15 and 30 gigawatts offshore wind in their medium term build plan. Tons and tons of capacity.

I have no doubt that they’ll actually build it, it’s just that it’s taken a little bit of time to get going the way the onshore developments have gone. Obviously it’s really huge for those coastal provinces that have nowhere to put renewables onshore. They have no space for wind or solar onshore. So if they wanted to increase their renewables consumption, they’re going to import from somewhere else in China. They were going to have to get it from western China on the other end of a UHV line or you can build offshore wind. So that’s going to be their solution, I think, to meeting their renewables goals with locally generated green power.

MB: There’s one city I looked at, it was very interesting. It’s in a huge bay and the bay is 80, 90 or 100 kilometers across. And the city’s big, I forget which one it was, but it caught my eye because they were building offshore solar and I was thinking they’re not going to be putting floating solar there. No, they built a honking massive platform in the sea and put traditional solar on that. And I was thinking, wow, that’s a really big platform. Let me just check something. And they had like 10 or 20 times the size of a wind farm further out to sea. The offshore capacities are just absurd. That was like one city with, as you say, 16 gigawatts of offshore wind.

DF: When your major bottleneck is land availability and the sensitivities around using, for example, farmland for industrial purposes, then you start to get really creative. Can we build platforms out in the ocean? Can we do floating wind? Can we do floating solar? Things that don’t make sense usually, but if the alternative was spending a ton of money in the developed coastal provinces to acquire land, or spending a ton of money to build long distance transmission lines to get it there from somewhere else in the country where the land is cheap, then all of a sudden building platforms on the ocean starts to make sense.

MB: Offshore wind typically made a lot more sense because the capacity factors can be quite high as well. I didn’t actually get a capacity factor answer for China’s onshore wind. I’ve heard varying things there.

DF: 24 or something like that. It’s lower than other places. I haven’t checked the most recent year, but I want to.

MB: 24 is good enough. It’s close enough for a podcast. That’s lower than the best places in the United States. What about the offshore wind capacity factor?

DF: Higher, but I don’t actually know that off the top of my head, unfortunately.

MB: So onshore wind, offshore wind. Do you happen to know roughly the total planned offshore wind capacity and projects that are kind of in a pipeline is. It’s like 16 to 20 per city and every city on the coast has them.

DF: How many is that again, off the top of my head? I’m not going to be able to tell you. It’s. You’re definitely looking at dozens to hundreds of gigawatts.

MB: How much offshore wind there is as best you can approximate.

DF: Let me find what you’ve got real quick. Oh, that’s horrible. 2023, we only added 7 gigawatts offshore wind. I’m just pulling this very quickly.

MB: Well, it’s still 7 gigawatts more than the United States has in total.

DF: Look, 2024, we’re expecting that we added around 13 gigawatts offshore wind. So again, compared to the numbers that you’d expect or that you get used to hearing from the rest of the industry, which are always so superlative, it does really feel like the offshore wind numbers for China are modest.

MB: It’s interesting to me because it requires specialized ships of a few types and China is one of the only geographies in the world that can actually build those ships. But they still have to build those ships and their ship building is oversubscribed.

DF: Yeah, I mean they’re military ships and passenger ships and transport ships and every type of ship. I guess even China can find a way to run out of production capacity.

MB: That’s two of three types of wind. I was kind of surprised there was a third type. Let’s talk about the third type.

DF: This one’s quite new. Distributed wind. There’s a new policy that just came out in the last couple months called 10,000 Villages Harness the Wind. It’s a policy for village level distributed wind to be promoted in some of these coastal provinces. Again we’re talking about regions that don’t have a lot of room for massive developments. It’s not going to be utility scale developments, huge wind farms blanketing the wind landscape, but in the same way that distributed solar ended up being so successful in eastern China, if you can slip a windmill here and there, put a turbine in this village and a turbine in that village, and can you aggregate together a couple gigawatts here and there?

That’s something I’m looking forward to quite a lot to see if it’s possible that this new policy, you know, based on the WHO rooftop solar development program being so successful. I’m really keen to see if this 10,000 Villages Harness the Wind distributed wind program is equally successful. That’s been a new policy since August or September, something like that. I’m not sure if we’ve seen any new projects that I can point to as a result of that policy, but I’m watching that one carefully.

MB: That’s going to be very interesting because in two or three months I’m keynoting the US Distributed Wind Energy Association’s annual conference in Arlington, just outside of Washington. This will be a subject because it’s a fascinating thing. I’ve been looking at distributed wind for a long time. Community wind was a big deal in Germany, for example, at the beginning of the energy lineup. They have all sorts of small wind farms that are owned by the towns and stuff. It’ll be very interesting to see. It’ll also be very interesting to see what they do with the setback due to noise because world health organizations say no more than 40 decibels of noise in bedrooms at night is recommended because otherwise you lose sleep.

I’m just thinking that, you know, with the density of population in eastern China, that’s going to be hard to achieve. But the alternative is coal plants.

DF: Maybe, maybe they’ll use one of those instead of the ones that go like this. It’s one of those cycle wind turbines. Right. You know, they spin a different way.

MB: I’ll just say that the efficiency of those are horribly bad. One of the subjects I know far too much about is wind energy.

Okay, so we have lots of onshore wind that’s suffering from curtailment. We have lots of offshore wind planned, but it’s not growing nearly as fast as everything else in China. It’s another area where there are blockages. But the plans are huge. Dozens of cities with 16 to 20 gigawatts of wind energy planned. It could be hundreds of gigawatts offshore wind that’s feeding city grids in the next 10 years. It’s going to be interesting when they get rid of the bottlenecks. 13 gigawatts installed last year. Okay. Then distributed wind, which is this new thing that’s going to be interesting. Next topic, solar.

DF: Love it.

MB: Go for it.

DF: Let’s talk about solar. So our big buckets of solar, of course you’ve got utility scale solar, and then there’s a subset of that called megabase solar. You’ve got your standard large solar plant. You’ve got a 50 megawatt, 100 megawatt solar plant somewhere, and then you’ve got a Chinese version of that, which is a desert megabase. That means you put your solar farm in the Gobi desert and it’s actually a gigawatt of solar next to a bunch of wind turbines next to a couple of coal plants next to a huge battery array. The whole thing is connected to a UHV line which is sending all the power somewhere else. That’s what you get out west, Inner Mongol, these desert mega bases.

So solar, regular utility scale, solar, super base, solar, distributed solar, which has been.

MB: Wait, wait, wait. Megabase and super base.

DF: Sorry, I’m just mixing my terms. They’re both large, big bases. Okay, hyper base.

MB: Now, if memory serves, the biggest solar farm in the world is in China. I think it’s 20 gigawatts right now.

DF: Or 22, they might call it farm, but maybe it’s many connected ones and I think India also has a claim to one.

MB: The scale of everything in China is so huge, it boggles the mind.

DF: Let’s see. The Xinjiang Solar Farm, 5 gigawatts and they’re still expanding it. No, wait, the Talatan Solar Park, 15 gigawatts. Yeah, they’re large and there’s multiple ones in this size. You can even get them confused about which one you’re referring to.

MB: You pronounce them much better than I do. I studied Mandarin for a year or so in Singapore. As I’m in a different part of the world, what language will I fail to learn this time? We have mega scale. What I heard you say was something very interesting there. They’ve got a solar farm that’s hybridized with wind battery and firming thermal generation at the end of an ultra high voltage, ultra high multi gigawatt capacity HVDC line that’s going into the demand centers in the southeast. For the geography challenged, how far away is the Gobi Desert from Shanghai where you’re sitting, for example? Roughly? I mean, how long are these HVDC lines?

DF: I mean, we’re talking thousands of kilometers. See, I’m just clicking here. Shanghai to the Gobi Desert, 2,000km. That’s long HVDC lines.

MB: I spend a lot of time on transmission because it’s an essential part of the toolkit, you know, broadening the grid so that your wind and solar can be where the electrons are versus where the demand is. It’s very interesting to see what China has done there. I hadn’t realized they were doing firmed bases for the HVDC but it makes complete sense now that I think about it. It’s an obvious thing.

DF: The line is built, it’s transmission infrastructure. It’s built assuming a certain utilization rate, a certain capacity factor over 20 years or 30 years or 40 years. If you’re not able to guarantee the usage of that line long term, why would the grid build it? You’ve got to be able to say we are sending power through that line most of the time or all of the time that we have firm generation on that side, we sign contracts on the other end of the line to supply power on that basis. We can’t say sorry the sun’s not shining, we must be supplying power.

MB: It’s interesting because I compare and contrast to some of the things like the sun cable that Mike Cannon-Brooks, the Australian billionaire is building in the desert of Northern Australia with a 3,500 kilometer subsea cable to Singapore which has received a couple more permissions recently. It’s moving along. But I hadn’t heard much about the firming stuff. The Morocco to UK one is wind, solar and batteries for 20 hours firmed electricity every day. It’s the same capacity as the Hinkley site C reactors for 20 hours a day for a fraction of the cost. It’s going to be very interesting to see how this plays out.

I always say this to people, go look at what China is doing, learn the lessons from them if you possibly can because they’ve been doing this at great scale. So that’s one category. How many categories of solar?

DF: We’ve got three here also. Okay, so we just talked about utility scale and the kind of the extreme example of utility scale ground mounted which is your super bases but also the country is just covered with regular ground mounted utility scale projects in the 10 to 50 to 100, you know, megawatt range, many of those.

MB: Has it been reported, the official stats for utility scale solar additions in 2024?

DF: Not for the whole year. We’ll get that probably after the Chinese New Year.

MB: We actually get a number early.

DF: Yeah, you do get an early number and then you get a later adjustment number. The challenge, I think, is always that it’s going, it’s only going to be your utility scale installations. It’s going to exclude distributed. We got distributed solar, in this case, rooftop solar. Rooftop solar is “Oh, don’t forget rooftop solar” in other markets.

In China, it’s 50% of the market. It’s absolutely massive. Eastern China has been the driver of rooftop solar. There’s very little rooftop solar in western China. Why would you bother? But eastern China, short on land, lots and lots of rooftops, so lots of rooftop solar. They had a program, it’s still ongoing, called the Whole County Rooftop Solar Promotion Program.

I love this program. It was a really effective, kind of a public private collaboration. It required municipal governments to tender out the rights to develop all of the rooftops within their jurisdiction to SOEs or to private companies. Anyone who wanted to submit a bid on developing all those rooftops at once. But the requirement was that you had to do them all. You had to do all the government buildings, all the industrial and commercial rooftops, and all the residential buildings, and you had to hit certain quotas for each one. So 50% of all the public buildings needed to have rooftop solar, 30% of all factories and commercial buildings, and at least 20% of all residential rooftops. You submitted a consolidated tender to do all of that at once.

You couldn’t pick and choose like, oh, residential doesn’t make any money. I only want to do industrial rooftops. No, to win the tender, you had to submit a bid to do all of it at once. A single county here, the municipality puts out their tender. A couple of developers look at the county, they do their surveying. They say, we think there’s probably about 170 megawatts of rooftop solar potential capacity. Here’s our best price, and here’s how long it’s going to take to do it. The municipality selects a solutions provider and they go out and they build the entire county’s rooftop solar. And they replicated that over, you know, hundreds, thousands of counties in eastern China.

They managed to yield tens, dozens of gigawatts of rooftop solar in some of these eastern Chinese provinces. Of course, you can’t build rooftop solar like that forever. There’s going to be a spike and then you exhaust your rooftops and then you start to go down again. We saw Shandong province, for example, is on its downswing now for distributed solar. Not because they’re losing interest in it because they’re running out of rooftops. But other provinces are going to be going through the same cycle. They’ll get this big swing where they’ll be able to install 30, 40, 50 gigawatts of rooftop solar in a period of a few years and then there’ll be no more after that.

The second big source of renewable solar capacity growth has been these rooftop solar programs in eastern China.

MB: I’ll just do a compare and contrast because it’s kind of fun. In the west, the biggest rooftop solar facility in the world is on the Tesla Gigafactory in Texas, as far as I know. Everybody’s like, holy crap, is that ever big. That’s 30 megawatts. Every county in China has, from what you’re telling me, far more rooftop solar.

DF: Oh yeah. I’ve been to some of these facilities, right? I went up to, we visited one of the companies and went to the top of a local high school. It was just a town, right? It’s a town where, like a lot of American towns, all the municipal buildings are right next to each other downtown? You have the high school next to the police station, next to the hospital, next to the civic center. It’s all in this little triangle. I’m standing on the high school and they’ve got a plaque up there. They’re just about to do their grid connection for 160 kilowatts of rooftop solar on this facility. And then the building next to it, they’ve got 130 kilowatts. Over there they’ve got more, and they put it all together and this little cluster right here of this section of this town has maybe a megawatt or two of power. When we finish this town, we’ll go over to the next town later.

We go back to the company’s meeting room and they’ve won the tender to develop this county. They’ve got this high resolution map of the county up on their meeting room wall. This is all we do. This is our life for the next year and a half. We’re just building on rooftops in this county. He looks at the wall and he goes, how many towns do you think there are in this county? I don’t know, like 100. He goes, There’s 900. There are 900 towns in this county. And what you just saw with the high school, the middle school, the hospital, the civic center and the police station, we’re gonna do 900 more times.

MB: The scale of stuff over there is just a dream. It’s being replicated in the global south. Pakistan rooftop solar was off the charts because there was a glut of solar panels last year. They were dirt cheap on the market. Everybody just bought them. Like balcony solar. Alignment with the sun is no longer necessary in Germany. People are buying them to hang off their balconies and tie on with zip ties and they’re plugging them. They’re building solar fences because they’re so cheap that you don’t care about alignment with the sun.

DF: You can do that here too. You can buy them on the Chinese Internet for 20 bucks. You can buy a rooftop hanging solar panel setup that you can plug your phone into so you can charge your phone from your solar panel and stuff like that. Of course, as cheap as they are in Germany, you can be sure that they’re even cheaper here because they’re trying to get rid of their supply. Every cool little toy that you can supply, that you can create, that is supplied by solar power somebody has developed because the solar manufacturers are desperate to find people to buy their panels.

MB: Everything in China is cheaper. People just don’t realize the purchasing power parity difference. But we are getting down to the short strokes here. We’re an hour and 20 minutes into the discussion and we still have storage. Well, we still have one more category of solar to do before we get to storage. So what’s the third category of solar? And how big and absurd is that?

DF: We’ve already mentioned it too. We’ve got floating solar. Floating solar is split into the ocean version of floating solar, which is, honestly, just ground mounted solar over water. True floating solar — solar on a boat, as Jenny Chase likes to say — is not actually much of a thing at all. I believe there are some pilots, some efforts to do true floating solar because China has a pilot to do everything. But most of the so called floating solar in China is ground mounted over water solar and that’s both in the ocean and over lakes and mine subsidence areas. So an area where they were mining previously creates a concave in the ground and you end up with a man made reservoir.

Those have been targeted by several provinces that used to have mining industries and now they have great big mine pits to build solar over them. They’re not going to get a ton of capacity out of that, but they are going to get capacity out of it. A number of provinces have named it in their five year plans as places where they intend to get maybe 3 gigawatts of solar from floating solar facilities, something.

MB: Well I’m glad to hear that because I went deep on floating solar a few years ago. I was considering it for the US Southwest where they had more drought conditions for a pumped hydro facility. I talked to one of the world’s leading experts on it, grabbed him, pulled him into the meetings. What I realized is that floating solar kind of sucks. So I’m glad to hear that when I hear about China’s floating solar, what they’re really doing is driving pilings into the seabed and putting a platform and then putting ground mounted solar on something stable. Because floating solar doesn’t make a lot of sense. The wind loads, the other problems.

As I say to people, if you’ve got a sheltered reservoir at the equator, that’s okay for floating solar. Everything else, not really. Okay, so there’s floating solar and what was that number? A province might only have 3 gigawatts in plan, which is to say more than most provinces in Canada are even considering ever for all solar.

DF: Yeah, my scales of reference are a little bit distorted for what I think is small, medium and large from working in this industry.

MB: China has, is it half or more than half of all the renewables in the world now?

DF: More than half.

MB: It’s just insane. Having just tossed aside the 3 gigawatts per 30 provinces of floating solar, a mere 900 gigawatts of solar as a rounding error thing, let’s talk about storage and there’s multiple categories of storage as well. It’s all big and it’s changing rapidly. How many categories are we going to talk about for storage?

DF: I’m not going to get so into the weeds on this one. You got your big ones, you got your most reliable and your classic, your mechanical pump storage. Pumped hydropower storage is quietly massive in China. Most of the storage capacity in China is still pumped hydropower storage. For quite a while to come, most of the capacity will be pumped hydropower storage. It’s just very large. I keep thinking that surely they must have exhausted all of the appropriate geographies to build more of it. They keep saying no, we have found more places to build pumped hydropower storage. Every province, but especially the renewables, heavy provinces have major build plans for storage.

If they have any hint of suitable geography for pumped hydro, they’re going to build it or they are building it already. Your industrialized kind of population dense coastal provinces struggle to find places, of course, but they’re the ones that have built all that rooftop solar, the ones who have that nasty duck curve going on in the middle of the day. They would love to be able to figure out where to put a few more pumped hydropower facilities as you move into the middle of the country and out west where you see more mountains, we are seeing more variation of terrain. You’ll see in their provincial level five year plans usually you’ll see quite a lot of pumped hydro power storage. Beyond that, batteries.

MB: Well, let’s just talk numbers because I love pumped hydro. It’s one of my other fond technologies. The numbers I tend to reference are that China has about 365 gigawatts of power capacity of pumped hydro in operation, in construction or in plan. One of the things I always say about pumped hydro is because it separates power from energy, the energy is typically a lot more multiples than it is for battery stuff. I’ve been using 8 to 12 terawatt hours of energy storage in those 365 gigawatts of power capacity.

Eventually China will probably have more battery power capacity but I doubt it’s ever going to have 12 terawatt hours of battery energy storage. That’s just the sheer scale of it. Once again this is China. It’s got vastly more pumped hydro in operation than anybody else and it’s got vastly more in construction and plan. The rest of the world should be looking at its pumped hydro stuff and saying let’s do more of that and you know there’s places to put it and stuff like that.

The Australian National University did a GIS study under Matt Stocks a few years ago. They looked for places with at least 400 meters of vertical height that were within 3 kilometers, that were close to transmission, that had room for a top and bottom reservoir for closed loop off river pumped hydro and were not unprotected. They found 100 times the energy capacity as the entire world needs for all storage.

DF: I’ve seen that study and I’ve gone through the GIS kind of platform that they provided. I did notice that quite a lot of their identified sites are like in the middle of the Himalayas or certain places where it’s actually really impossible to build. I did note that quite a few places are in fact where it looks like it might be built, there were quite a few that looked like they were built on ski hills. That might be upsetting for some winter sports fans.

MB: The way I always put it is two things. An enormous number of the sites, especially in North America are old coal plants and old coal mines sites. Those, and they have people who know how to do stuff with rock. The second is if only 1% of them are viable for other reasons, that’s still all that we need. I’m just wondering by the way, China Light and Power (CLP) in Hong Kong. I spoke to them a few years ago and their pumped hydro facility is about 25 gigawatt hours in Guangdong province on the mainland. I wonder if the Pearl River Delta cities are just like, can we get that?

DF: You know, I’m not sure if they are typically using that facility just to supply power to Hong Kong or if they’re just making money from selling power in the mainland. On that one, they might be doing both because they have both a mandate to supply power to Hong Kong and they’re a commercially minded company that can make money on their projects in, in other jurisdictions. They could be doing either with that. I think they’re doing quite well with that.

MB: It’s been lights out for a decade now. It just sits there and operates. Okay, so that’s pumped hydro. Next category.

DF: Battery storage. Non hydro to be more precise, which is 97% lithium ion batteries. Earlier in the conversation I said that the great majority of Chinese storage is hydro in terms of installed capacity. Actually this year that just became not true. I was pulling up the numbers to confirm battery storage actually just passed hydro this year in terms of installed capacity. Just past pumped hydro. Not in terms of energy, just in terms of the installed nameplate capacity. That’s a very interesting number to have appeared. The vast majority of that is lithium ion batteries. And lithium batteries are super flexible.They can do a lot different things.

In the case of Chinese energy sector batteries, they get their revenue from three different channels. You have your energy arbitrage world. Operate your battery facility by buying power when it, charging the batteries when it’s cheap and discharging when power is higher. This is possible in provinces that have a spot market. You can operate your batteries like that. You can get money in your ancillary services market which is load following or flexibility support for your renewables, stuff like that. Batteries can also earn a capacity charge in many provinces. Then actually the biggest driver is because there’s a regulatory mandate for new renewables facilities to include batteries for storage.

Based on the province it will have between 5 and 20% of the renewable facilities’ nameplate capacity must be covered by batteries for either two or four hours. They don’t have to build it themselves. If you have a 10 megawatt solar farm and your requirement is 20% for two hours, okay, so now we have to prepare two times two hours. So 4 megawatt hours of batteries must be prepared for our facility. You don’t have to build it yourself, you can rent it from the battery farm down the road. You have these independent third party battery operators who build facilities close to where the renewables are getting built so that they can rent out their capacity to the renewables owners. Those are going to be your three main drivers.

For the moment, renewables generation is only just getting to the penetration level in some provinces where batteries become really necessary to start smoothing out some of those imbalances. For several years this requirement to build batteries has been in place without a really strong business case for them that the batteries weren’t needed yet. It was just adding to capex, it was just making the projects more expensive. You couldn’t even make money back yet. Now as you see power markets emerging, you see spot markets, you see Shandong has a duck curve in its spot market, just like California does.

Then you can see batteries moving that daytime surplus and then slowly canceling out some of that evening peak, smoothing out the evening peak by moving some of that surplus to the evening with batteries. You can see the need for the batteries arising finally. It now looks like it was quite good foresight three or four years ago to mandate the batteries because if they’re only starting to be built now, we’d have to deal with that duck curve for many more years instead of just a year or two. That’s the big driver of batteries and that’s the other major energy storage.

There’s all these emergent things, compressed pressed air and flywheel and there’s a couple of prototypes and a couple of demonstration projects here or there. They might have very niche applications, but pump storage and batteries, those are two.

MB: Let’s talk about batteries because they just had the auction for LFP, lithium iron phosphate battery, energy storage systems. They had an auction for 16 gigawatt hours of batteries. They had 78 applicants bid. Across the 78, the average bid price for 20 year maintenance contracts and operation contracts for full battery energy storage systems — thermal management, battery management systems, energy management systems — was $66 US per kilowatt hour. Stunningly low prices. Stunningly low. It just changes the economics.

One of my engagements this year was with a green infrastructure fund. The question they had was we have the potential to buy into an existing pumped hydro facility, but are batteries just going to get so cheap that it’s not going to be worth it?

DF: Well, they serve different purposes normally. Batteries solve your multi minute to multi hour problems and your pumped hydra solves your multi day to multi week problems. If your batteries get so cheap that you can start using them in a multi week manner, maybe pumped hydro loses its attractiveness. That being said, the minerals exposure on pumped hydro is maybe a little bit less concerning. Do we eventually run into some sort of constraints on how many batteries we can actually deploy? How much lithium costs? Lithium is pretty common, but how much we can actually produce, how much does it cost to produce? Maybe those become the barriers and we’re still happy to have the pumped hydro.

MB: It’s going to be interesting to see but the storage problem is solved from my perspective. Okay, so that’s the categories.

At the end of these discussions, I always like to say it’s an open ended thing. Anything we didn’t cover, anything you think would be interesting, something that’s pertinent and relevant for the audiences. Take it away. What do you want to share?

DF: I have a little bit of a philosophical question for the audience. China’s been driving forward so much, pushing the envelope forward so much on solar and wind and batteries and all these different clean techs and even things like coal efficiency. They’re doing all of these because of certain motivations. Some of the motivations I think are pretty clear. We can all agree that China has a strong motivation to combat pollution. Pollution was a major issue and it makes sense that pollution is one of the things that you’re trying to fight. We could say China’s interested in increasing energy security and self sufficiency. We could say China wants to have a more competitive clean tech industry which is a good economic pillar for the economy, especially when real estate is doing poorly. Real estate is dropping but green infrastructure is growing.

These are all strong motivations for China to do clean tech and do it huge, do it very well. Notably, one thing you’ll notice a lot of people don’t think is necessarily a strong motivation is the noble pursuit of decarbonizing, of reducing carbon emissions because it’s the good thing for humanity. Maybe it will say things like that in policy documents, will say that we need to combat global warming and climate change. But broadly, I get the impression that in the industry here in China that people believe the stuff I mentioned at the beginning are the stronger motivators and decarbonization is just kind of a good incidental outcome. That being said, it is a good incidental outcome.

So my philosophical question is does it matter what the motivations are? Should your motivations be noble or should your motivations be self serving in the pursuit of what is eventually a huge advancement in clean tech? Perhaps the more incisive question here is it possible that these kind of self serving or even selfish inward looking motivations are more compelling, are actually stronger motivations to get us where we want to go? And that noble altruistic motivations about decarbonization are all well and good, but they’re actually not strong enough to get us to where we want to be. That’s my last thought for the pod.

MB: Excellent. This has been Redefining Energy Tech. I’m your host, Michael Bernard. My guest today has been David Fishman, senior manager at the Lantau Group and one of the world’s leading specialists on what’s happening in China with electrical generation. David, thank you so much for joining me today.

DF: Thank you so much for having me.