Jakarta, CNBC Indonesia – Global coal prices weakened as the use of energy from coal declined compared to renewable energy in China, the world’s largest consumer of black gold.
The ICE Newcastle coal price for the July contract on Tuesday (18/6/2024) closed at US$134.9 per troy ounce, down 0.4% from the previous price.
China is generating large amounts of electricity from wind and solar power plants, as a result of the implementation of addit
ional generating capacity over the past two years by May 2024.
Wind power generation increased to 77 billion kWh from 74 billion kWh in May 2023 and 59 billion kWh in May 2022, according to data published by the National Bureau of Statistics. In the same month, solar power generation jumped to 36 billion kWh from 24 billion kWh a year ago and 21 billion kWh in 2022.
The increase from hydropower (+33 billion kWh), solar (+12 billion kWh) and wind (+3 billion kWh) last month was more than enough to meet consumption growth while reducing the need for thermal power (-17 billion kWh).
Thermal power generation, which mostly comes from coal-fired power plants, declined to 454 billion kWh in May 2024 from a seasonal record of 471 billion kWh in May 2023. Lower coal combustion means lower carbon dioxide emissions helping progress towards the government’s emissions target of peaking before 2030.
Long-term progress towards peak emissions will depend on growth in wind, solar and nuclear energy, as well as policies to improve energy efficiency and reduce load growth.
Heavy spring rains in China have allowed the country to sharply increase hydropower production and reduce the need for coal-fired power generation in May.
Hydropower generation surged to 115 billion kilowatt-hours (kWh) in May 2024, up from 82 billion kWh in the same month last year, when a prolonged drought lowered river levels.
Hydropower generation is the second highest for any year in the past decade and not far below the record 122 billion kWh after heavy rains in the spring of 2022.
The core of the system is a series of six enormous multi-story power stations, stretching 1,800 kilometers (1,118 miles) along the Yangtze River, with 110 individual generators and a combined maximum output of 72 million kilowatts (kW).
The stations at Wudongde, Baihetan, Xiluodu, Xiangjiaba, Three Gorges and Gezhouba could meet the annual electricity needs of 54 million people and save up to 15 million metric tons of coal if fully utilized, according to Xinhua.
But a prolonged drought between mid-2022 and the end of 2023 led to sharply reduced power generation, including at the recently completed Baihetan, the world’s second-largest hydropower project.
Since early April, however, spring rains in southern China have been heavier than average, increasing river volumes and allowing more utilization of hydropower plants.
The system is preparing for the arrival of heavier rainfall in July and August during the wet phase of the East Asian Monsoon.
If monsoon rainfall is average or higher, electricity generation is likely to reach a record high this summer, surpassing the previous record high four years ago, given the massive increase in capacity since 2020.
In 2020, China installed 370 million kW of hydropower and generated a record 1.214 billion kWh during the year. By 2024, capacity increased by 14% to 423 million kW, potentially setting a new record.
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