On 17th of March 2016, the 13th Five-Year Plan for Economic and Social Development has been released by the Chinese government. It sets the targets and guidelines for the development of the Chinese economy for the period of 2016 to 2020. Certainly, its effect on China’s energy sector cannot be underestimated.

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© Associated Press

A range of targets in China’s 13th Five-Year Plan show that the Chinese Government aims at deepening the long-term transition towards low-carbon and clean energy sources. The plan sets an overall energy target of 5 bn tons of standard coal equivalent. It is however very likely that this target rather constitutes a ceiling, as experts believe China might be able to keep its total energy consumption below 4.7 bn tons in 2020.

The targets for energy intensity and carbon intensity reduction for the year 2020 were set at 15 % and 18 % compared to 2015. Given the overachievement of those targets in earlier Five-Year Plans, the government is confident to cut the country’s carbon intensity by 50 % below 2005 levels by the year 2020.

Furthermore, the increase of non-fossil energy (nuclear and renewables) from 9.4 % to 12 % of primary energy consumption from 2010 and 2015 made China’s intention for a transitioning of its energy sector evident. The current targets for the share of non-fossil energy in the primary energy consumption are at least 15 % by 2020 and at least 20 % by 2030. The fact that overall energy consumption started to grow slower under the “new economic normal” works in favor of those targets. The director of the National Energy Administration of China, Nur Bekri, stated that China aims to add 15 to 20 GW of PV every year until 2020. With this approach, China’s PV capacity would triple and reach 143 GW by then.

Challenges for China’s energy sector are however still apparent. First of all, the integration of renewable energy into the grid is often compromised by high curtailment figures for wind energy. In addition, utilization hours of thermal power plants are on the lowest level since 1978. In 2015 they only stood at 4329 hours, less than 50 %. However, China’s power generators still have plans to build around 210 GW of new coal-fired power plants. Accordingly, the government plans to cancel projects to avoid the build-up of even more overcapacity.