China will aim to use more renewable energy such as green hydrogen and green ammonia to avoid curtailments of solar and wind power whose soaring capacity sometimes boosts clean power generation beyond the limits of the grids. 

China will promote and support the use of renewable energy beyond the electricity generation sector over the next five years, the National Energy Administration (NEA) said on Wednesday in a new plan on integrating renewable energy in the economy to 2030. 

Green hydrogen and green ammonia are produced using renewable power sources to split water into its hydrogen and oxygen molecules. Green hydrogen is expected to be used in heavy industry and as a fuel, or for feedstock to produce ammonia.  

NEA is also encouraging China’s coastal provinces to explore the potential of using power generated from offshore wind for hydrogen production, according to the administration’s document quoted by Reuters. 

As China’s solar and wind installations soar, power generated from these assets needs to be curtailed at times when generation exceeds the amount the grid can absorb.  

Renewable electricity curtailment is set to “pose a major risk to income stability alongside power price fluctuations,” Wood Mackenzie said in an analysis of China’s renewables growth. 

WoodMac forecasts that average wind and solar curtailment rates will exceed 5% in seven and 21 provinces, respectively, over the next 10 years. 

Provinces with high curtailment rates and volatile power prices will face challenges attracting investment under the new pricing mechanism in China’s renewables sector, said Sharon Feng, senior analyst, China power market at Wood Mackenzie. 

“Developers need to carefully evaluate provincial grid conditions and long-term price projections when making investment decisions,” Feng added. 

Using part of the renewable energy for green hydrogen and green ammonia production could ease the strain on the grid and expand the use of clean energy in the world’s leader of renewable investment and installations. 

By Michael Kern for Oilprice.com

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