Must-know: Why China has a high appetite for coal
Will changes in China's economy impact US coal producers? (Part 3 of 13)
Largest fossil fuel consumer
Coal has been a primarily development fuel for most of the countries in the world. The U.S. increased its development by using coal during the Industrial Revolution—after the Civil War. Germany used coal to develop its industries after World War II. China is no exception.
70%—or 883 gigawatts (or GW)—of China’s massive 1,260 GW capacity is fired by fossil fuel. Most of the fossil fuel is coal. China is the largest coal consumer and importer in the world. It provides opportunities for coal producers (KOL) like Alpha Natural Resources (ANR) and Peabody Energy (BTU).
Nuclear and hydro
China’s 253 GW—20% of the total—hydroelectric capacity is equivalent to India’s total electricity generation capacity. China’s hydropower capacity grew quickly from 216 GW in 1Q13 to 253 GW in 2Q14. The growth was due to the construction of huge dams—like Three Gorges and Yellow River.
Nuclear capacity remains relatively small at 18 GW. However, the administration is planning to have 150 GW of nuclear capacity by 2030. This will create opportunities for U.S. companies like General Electric (GE) and Fluor Corp. (FLR)—depending on domestic supplies.
Wind and solar
While thermal and hydroelectric power account for 90% of the installed capacity in China—nuclear, wind, and solar power hold special significance in China’s energy policy. With a coastline of over 9,000 miles and vast available land area, China has the potential to generate electricity from wind. China holds 83 GW of wind capacity—the largest in the world. China plans to have 100 GW in wind capacity by the end of 2015. China had a solar capacity of 18.3 GW at the end of 2013.
The massive power generation sector in China needs an equally large transmission and distribution infrastructure. In the next part of the series, we’ll discuss China’s transmission and distribution sector.
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