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4 January 2023

China minding its own agenda with $12bn almost green energy hub

China Three Gorges Energy, a state-owned power company, set the gears in motion with the construction of the first pilot project as part of the 16 GW Kubuqi Desert energy hub. Jointly constructed with the Mengneng Group, the Kubuqi hub is claimed to be the world’s largest renewable farm of its type.

The pilot project will take the shape of a 1GW solar farm plus additional storage. With planned capacities of 8GW solar, 4GW wind and 4GW coal that will account for peak demand amortization, the almost green desert farm doesn’t have a public deadline as of now, but it will most likely be fully operational by the end of the decade as China is preparing to meet its 2030 renewables goal.

Already leading the charge for a sustainable future, the east Asian country plans to add over 600GW of solar and wind capacity by the start of the next decade and has already pledged to meet the net zero emissions target by 2060, unlike most countries whose pledges are aimed at 2050 – although one has to take into account the scale of transition that China needs to achieve. Chinese steel and cement manufacturing represents half of the global production capacity and alongside chemicals plants and non-metallic mineral factories, these industries account for around a third of the total energy consumed annually in China.

China will be keen to take advantage of the natural resources found in the Kubuqi Desert located in the northwestern autonomous region of Inner Mongolia which also houses the Gobi Desert in order to propel its efforts to decarbonize. With values reaching almost as high as 1900kWh/m2, Inner Mongolia is only behind the Tibetan Plateau in southwest China (~2500kWh/m2) when it comes to solar irradiation in the country. In terms of wind speeds, the order reverses as Inner Mongolia can be subjected to gusts as fast as 9m/s while southwest Tibet will most likely settle for speeds as high as 7m/s.

The Kubuqi Desert energy hub, upon completion, will be capable of providing the Beijing, Tianjin and Hebei provinces with 40 TWh per annum, out of which more than half will come from solar and wind.

Many of such desert renewable farms are often linked to hydrogen production and even export – Rethink has covered multiple deals including Thailand, India and Australia which can be accessed here. So far, the public statements released by Three Gorges don’t mention any such plans but given that the levelized price of green hydrogen is highly dependent on the local wind speeds and solar irradiance, China surely can’t pass on the opportunity. Last spring reports came out signaling the country’s 2025 target of hydrogen production being between 100,000 and 200,000 tons. Over the course of last year, China also saw electrolyzer shipments rise up to 800MW (mostly Alkaline) – a 100% year-on-year growth.

Adopting a centralized green hydrogen production approach seems sensible for China given the vast openings that it possesses in the forms of northern and southern deserts and plateaus rich in renewable resources like solar irradiation and wind speeds.

One more thing that is playing in China’s favor is its existing central heating system that runs on natural gas and provides district home heating for its northern provinces. The pipelines used to transport the natural gas can be retrofitted to distribute hydrogen towards places like the capital of Beijing located only around 500 km away from the Kubuqi Desert.

China Three Gorges has also announced 21 other projects that it will develop, amounting to almost 4GW which will require an additional investment of around $2.5 billion.