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China’s electricity industry faces severe water shortages and that could be good news for the environment

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For those keeping track of China’s looming environmental apocalypse, here’s another thing to worry about: The nation’s coal-fired power plants face severe water shortages that could disrupt their operations—and the economy—in the years ahead.

Coal supplies nearly 80% of China’s electricity and has fueled the country’s economic boom. But thermal power plants need water to generate steam and cool their operations. Yet 85% of  China’s generating capacity is located in “water-stressed” regions, according to a report released today by market research firm Bloomberg New Energy Finance. And 60% of China’s electricity is produced in northern China, which has just 20% of the country’s freshwater supplies. The map above shows how China’s coal-fired generating capacity is concentrated in regions where water is scarce.

It gets worse for China’s big five state-owned utilities. Two of them, Huaneng and Datang, have 84% of their generating capacity tied up in areas that are moderately to severely water stressed. Even the utility with the least exposure to water shortages, Guodian, faces water-related risks to 65% of its assets, according to Bloomberg.

Bloomberg estimates that Chinese utilities will consume 124 billion cubic meters of water annually by 2030, up from 102 billion cubic meters in 2010.

“The era of water abundance in China is over, and competition for resource access between business, agriculture, and urban centers is starting to bite,” said Maxime Serrano Bardisa, one of the report’s authors, in a statement.

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It’s not just a Chinese problem. As climate change-driven droughts increase in frequency and severity, nuclear power plants in the US have had to cut electricity production. And during a heat wave last August, an 800-megawatt nuclear reactor in Connecticut shut down temporarily because the water it draws on became too warm.

Coal-fired power plants and coal mining suck up 15% of China’s freshwater supplies, according to Bloomberg, which based the report on data from China’s National Bureau of Statistics and its own forecasting models. And about 17% of power plants don’t recycle the water they use but continuously draw from rivers and other bodies of fresh water, degrading water quality and harming fish and other aquatic life.

Bloomberg estimates that it would cost China’s utilities $20 billion to install more water-efficient technologies. Older, more water-intensive power plants generating 10 gigawatts of electricity would need to be taken offline, in addition to the 78.6 gigawatts-worth of such plants that the government already plans to shut down. But there’s a catch: Cooling systems that use less water also make power plants up to 10% less efficient, which means higher carbon emissions as they burn more coal to make up for the deficit.

Nathaniel Bullard, a Bloomberg New Energy Finance analyst in Hong Kong, told Quartz that China’s water problems could be good news for renewable energy producers and the country’s beleaguered solar industry. Wind and solar farms consume little or no water, and the government may seek to replace some coal-fired power in water-stressed regions with renewable energy. In 2013 alone, China’s National Energy Commission is set to commission 10 gigawatts of solar installations and 18 gigawatts of wind energy, according to Bloomberg.

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