Innovation and reduced costs lie at heart of realizing ambitious goal of cutting carbon emissions

China, a leader in using renewable energy, will focus on solar and wind power generation in the years to come to realize its ambitious goals of reducing carbon emissions. The country has pledged that carbon emissions will reach their peak by around 2030, and as it tries to reach that goal even earlier it has been working on technological innovations to reduce the cost of renewables and raise the capacity of installed solar, wind and hydropower. During a meeting of the International Renewable Energy Agency in Abu Dhabi on Jan 17, China issued the latest data on its renewable power generation capacity, which continued to be the world's largest last year.

China had installed 430 million kilowatts in total renewable energy power generation, accounting for 32 percent of the country's total power generation capacity, says Shi Lishan, deputy director of the new and renewable energy department with the National Energy Administration, the country's top energy planner.

That compares with just 52 million kilowatts in 2011, when renewable energy generation capacity accounted for 4.8 percent of the total, the China Electricity Council says.

The International Renewable Energy Agency says China installed more new renewable energy capacity than all of Europe and the rest of the Asia-Pacific region combined in 2013.

"The main drivers for this shift are the increasing cost-competitiveness of renewable energy technologies and other benefits such as improved energy security and decreased air pollution," said a report by the agency on China's renewable energy prospects.

Last year China generated 1.2 trillion kilowatt-hours of electricity from renewable energy, accounting for 22 percent of the country's total power consumption, Shi says.

China will strengthen communication and technology exchanges with other countries to improve the global renewable energy industry and would like to provide support to underdeveloped countries for their renewable development, he says.

As a member of the International Renewable Energy Agency, China also hopes the organization will accelerate the standardization process of technology, products and trading in the renewable energy industry, Shi says.

China outlined the 13th Five-Year Plan (2016-2020) on energy industry two months ago, raising output targets of renewables, especially solar and wind.

Under the plan the country's total installed capacity of wind power will reach 200 million kW by 2020, twice what it was in the 12th Five-Year Plan, and capacity of solar power will be more than 100 million kW, five times what it was in the 12th Five-Year Plan.

Li Junfeng, director of the National Center for Climate Change Strategy and International Cooperation, said there are no technical difficulties for renewable energy developers and related equipment manufacturers to realize the target.

"However, building the grid should be in accordance with solar and wind generation capacity, which is crucial for development."

In addition, the country plans to install about 30 million kilowatt biomass power by 2030, more than double the target in the 12th Five-Year Plan.

The biggest driver for increasing renewable power installation has been falling costs over the past few years.

An expert close to the new-energy companies says: "The wind power price will be equal to the on-grid price of thermal power by 2020, and solar power will be the same as the grid retail price by then, which means the unit wind electricity price will fall from 0.6 yuan (1 cent) a kWh now to 0.4 yuan a kWh, and solar prices will fall from 0.9 yuan now to about 0.6 yuan a kWh."

Wang Zhongying, director of the China National Renewable Energy Center, says that with technological innovation, the costs of renewable power generation will continue to fall. The government has an even longer vision for the country's energy supply structure, to 2050, he says.

"Up to two-thirds of the country's energy use will come from renewables by 2050," he says.

The center estimates that up to 86 percent of power generation will come from renewable energy sources by then.

By increasing renewable energy use, China will cap its coal use to 1.5 billion metric tons by 2050, which will help the country cut its emissions to levels not seen since the 1980s, Wang says.

China's energy consumption by standard coal was 3.7 billion tons in 2013, and it has been rising.

The ambitious green vision of the world's biggest energy user has attracted increasing investment in the renewable energy industry.

Investment in renewables has risen almost six-fold over the past decade, from $55 billion in 2004 to $310 billion in 2014, the International Renewable Energy Agency says.

Globally, there was a significant jump in the growth of new funds for wind, solar, biofuels and other low-carbon energy technologies last year, says Adnan Amin, director-general of the agency.

"Even despite falling oil prices, we expect this trend to continue in power generation, especially in developing countries."

Global crude prices have fallen about 60 percent to about $44 a barrel since June, resulting in financial difficulties for many energy developers, including shale gas companies in the United States.

However, "a decrease in oil prices does not substantially alter renewable energy competitiveness within the power sector since oil accounts for under 5 percent of global electricity supply", Amin says.

"China has become a global leader in renewable energy development with its vast resources and great potential. With the cost of reduction of solar and wind power generation, it will further raise the share of renewable energy among the country's energy mix."

Chinese officials say the country will continue to raise investment in both unconventional energy exploration including shale gas and renewable energy development, especially solar and wind, and that foreign capital is welcome in producing this growth.

On Jan 21, during the World Economic Forum in Davos, Switzerland, Premier Li Keqiang said there is no need to worry about China's economic slowdown and that the country will gradually open its finance, education, culture, medical and old-age service markets to foreign investors.

China will make great efforts to reduce coal in generating energy, and that will present opportunities for China's new energy markets for foreign investors.

Bloomberg New Energy Finance published a report on Jan 15 saying China ranked first in renewable investment last year, followed by the US. China's investment in clean energy was $89.5 billion, 32 percent higher than in 2013, the report said.

The report said that despite the disturbance caused by the fall in oil prices, investment in renewable energy industry rose 16 percent to $310 billion globally last year.

Many solar and onshore wind projects worldwide received financing last year.

"The steady investments in clean energy might surprise analysts who believe the crude price fall would limit the renewable industry's development," said Michael Liebreich, chairman of the advisory board of Bloomberg New Energy Finance.

"Based on our data, it is too early to say that. The oil price fall has influence most on the transport sector, not the power sector."

Investment growth is higher than the 10 percent Bloomberg New Energy Finance had expected because of accelerating investment in the solar photovoltaic industry, he says.

The cost of solar PV has become very competitive over the past five years, which contributed most to the big rise in investment in renewables last year, Liebreich says.

Global investment in solar totaled $149.6 billion last year, 25 percent higher than the year before, and accounting for almost half the world's investment in clean energy, Bloomberg New Energy Finance says.

China's investment in new solar projects last year totaled $30.4 billion, more than 20 percent higher than the previous year. Investment in wind energy totaled $38.3 billion.

Boosted in particular by Chinese government encouragement of projects introducing locally distributed solar power, investment in the country's small and medium locally distributed solar power projects reached $7.6 billion.

Solar photovoltaic module prices were about 75 percent lower last year than at the end of 2009, the International Renewable Energy Agency says. Between 2010 and 2014 the total installed costs of utility-scale PV systems fell 29 percent to 65 percent, depending on the region.

Michael Taylor, a costs expert with the International Renewable Energy Agency, says: "We are not the first generation to have a vision of a renewable energy future, but we have the privilege of being the first generation to see its cost become competitive to fossil fuels, which will make the solution happen."

The power generation sector is transforming, in a virtuous cycle with support policies stimulating increased deployment, which in turn results in technological improvements as well as continual cost cuts, he says.

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