Energy Insider: State Grid Spends Big to Tackle Transmission Bottleneck, Solar Firms Struggle Amid Overcapacity

## Summary

This week's Caixin energy wrap outlines key developments in China's climate and energy sector, focusing on policy, industry trends, and significant projects [para. 1].

### State Grid's Increased Investment in Transmission Infrastructure

**What's New**: The State Grid Corp. of China has significantly ramped up spending to address transmission bottlenecks. The aim is to facilitate the transfer of wind and solar power from western regions to industrial hubs in the east. This year, the State Grid is set to invest a record 600 billion yuan ($83 billion), an increase of 71.1 billion yuan from 2023, to improve the power system, rural grid connections, and network digitalization [para. 6].

**Why It Matters**: China recently marked a landmark moment as its installed wind and solar power capacity exceeded its coal power capacity for the first time. However, inadequate long-distance transmission infrastructure poses major challenges for continued renewable energy development [para. 8].

### Solar Manufacturers Facing Overcapacity and Price Wars

**What's New**: Overcapacity and a resulting price war have forced many Chinese solar manufacturers to slow down or halt their production. Industry consolidation is being urged to combat the financial strain, as many companies posted losses for the first half of the year. Notably, the Communist Party's top decision-making body has advised industries to practice self-discipline and curb excessive competition [para. 9][para. 11].

**Why It Matters**: Severe overcapacity has driven the price of solar panels below production cost, plunging to around 0.8 yuan per watt in July from nearly 2 yuan in early January last year. This financial strain necessitates faster industry consolidation to maintain viability [para. 12].

### Renewable Power Capacity Growth

**What's New**: China installed 134 gigawatts (GW) of renewable power capacity in the first half of 2024, reflecting a 24% year-on-year increase. This includes wind, solar, hydro, and biomass power, with solar power leading the growth by adding 102 GW. Renewable sources now account for nearly 54% of China’s cumulative power capacity [para. 13].

**Why It Matters**: The rapid growth in renewable capacities, particularly in wind and solar energy, positions China to meet new electricity demand and potentially peak its carbon emissions before 2025, as emphasized by a Greenpeace East Asia project lead [para. 15].

### Shanghai's Offshore Wind Power Ambitions

**What's New**: Shanghai plans to build 29.3 GW of offshore wind power plants, which would account for nearly 80% of China's current offshore wind capacity. These plants are expected to generate 100 terawatt-hours (TWh) of electricity annually, more than half of Shanghai’s consumption in 2023 [para. 16].

**Why It Matters**: By leveraging offshore wind resources, Shanghai aims to enhance its energy security, reducing dependency on imported electricity. Other coastal regions in China are also rapidly advancing offshore wind power projects [para. 18].

### Long-Term Green Power Contracts

**What's New**: The Beijing Power Exchange Center is contemplating the introduction of long-term contracts for green electricity trading. These contracts would typically last five years or more, compared to the current one-year agreements [para. 20].

**Why It Matters**: Increasing green electricity trading aligns with China’s broader goals for renewable energy usage. Long-term contracts would provide stability for both suppliers and consumers, ensuring reliable supply and income while mitigating price volatility [para. 21].

The summarized content encapsulates the major developments in China’s energy landscape, highlighting the country's robust steps toward addressing infrastructure challenges, industry consolidation, and leveraging renewable resources for sustainable growth.