Power sector capital expenditures in China will remain high through 2020, despite slowing capacity growth, as the power sector is shifting from supply sufficiency to consumption efficiency and environmental friendliness, according to a report issued by Fitch Ratings on Wednesday.
Net capacity additions will remain large and the migration toward a cleaner energy mix featuring more solar and wind power will require more expensive technologies, Jenny Huang Xiaoting, an analyst at Fitch Ratings, said at a press conference in Beijing.
Growth in the country's power consumption is set to slow over the next decade as the Chinese economy rebalances toward a more sustainable, services- and consumer-oriented growth model, the report said.
Capital expenditures in the power sector will grow 20 to 40 percent in the next five years compared with the previous five-year period, with a growing proportion of cleaner energy, which is more costlier than coal-fired plants, Fitch said.
"In addition to hardware investment in cleaner power sources, there are also other expenditures, such as the massive relocation of residents before the construction of a hydro plant," Huang told the Global Times on Wednesday.
Clean power capacity growth will continue to outpace total capacity growth, putting the country on track to meet the government's target of increasing the capacity share of clean power to around 40 percent in 2020 from 33 percent in 2014, according to the Fitch report.
But coal-fired plants will remain the dominant power source in China, with Fitch estimating that coal-fired plants will still account for around 60 percent of the national capacity by the end of 2020 due to the country's ample supply of coal.
The big five power producers - China Huaneng Group, China Guodian Corp, China Huadian Corp, China Datang Corp and China Power Investment Corp - controlled about half of China's total installed generation capacity by the end of 2014, the report said.
