China’s energy crisis could reach Himalayan scale
This makes the problems in the backyard of the Three Gorges a warning sign for other economies in Asia seeking to follow China’s development path. Daily hydropower output has fallen 51% amid the worst Yangtze drought since the early 1960s, part of a global dry-up that has also closed the Rhine to barge traffic. This has led to plant closures as growing demand for air conditioners comes up against the constraints of a provincial grid that depends on dams for four-fifths of its electricity.
The hydroelectric potential of the Yangtze and its sister rivers originating in the Tibetan plateau is crucial for the future of Asia. Nearly half of humanity lives in countries dependent on vast rivers fed by glaciers and the snowpack of the Himalayan plateau and mountains. There is hot debate over how this frozen pool of water will behave as the climate warms – but events this year in Sichuan, southwest China, show that even a change in Downstream precipitation can affect the production of large dams.
This is important because these rivers provide much of the clean energy that will be installed over the next decade. While China’s current crop of dams will likely be the last it has built in many years, India has about 29 gigawatts on the way, with another 13 gigawatts in neighboring Pakistan, Nepal and Bhutan. Another nine gigawatts will come from Vietnam and Laos, which are heavily dependent on the Mekong River fed by the Tibetan plateau, according to the International Energy Agency.
Renewable energy – which depends on the whims of planetary forces rather than the certainties of the industrialized fossil fuel supply chain – still suffers from variability in production. Dams, however, are often considered free from the worst effects. With reservoirs acting as a vast battery of stored energy, they have great freedom in determining their production on any given day. So-called pumped hydroelectric plants can even move water between two different elevations, providing a surge of electricity at the push of a button.
The drought on the Yangtze shows how climate can blur this logic. Major solar variability can be measured in hours, governed by sunrise and sunset, and relatively easily corrected for by using batteries to shift peak midday generation to peak grid demand in the early evening.
Wind volatility moves in days, characterized by what is known in Germany as a dunkelflaute – a period of about a week when the weather is unusually calm and cloudy, which reduces turbine output even if solar panels are underperforming. Currently, these conditions require imports from other regions and increased burning of fossil fuels to keep the grid running, but do not cause outages.
Hydropower, however, has a unique ability to underperform for an entire season. Given its scale in the Chinese grid – at the peak of 2016, it accounted for around 18% of electricity production – this is a problem. So far this year, the gap between the highest and lowest months for wind generation in China has been equivalent to around 38% of average monthly generation, while solar and nuclear have both recorded more stable figures of around 13%. The equivalent variability gap for hydroelectricity is 58%.
The scale of backup needed to close this gap is immense. China has mined about half a billion tonnes more coal so far this year than it did at the same time in 2019, equivalent to the annual consumption of the United States – but that’s not is still not enough.
These low-carbon energy developments are welcome – but too often, as in Pakistan, they are the centerpieces of grid plans that give too little space to wind and especially solar, whose affinity with the hot, dry weather the country has in abundance complements hydroelectricity’s love of rainfall. Pakistan sees hydropower drop from 31% to half of its generation mix by 2030, while wind and solar will drop from just 3% to 10%.
This could prove to be a costly mistake. Without a diversified generation mix, grids will have to fall back on the energy source that can be imported from abroad: fossil fuels. Future droughts are already expected to weigh on the balance of payments as food import bills rise, a phenomenon seen in Egypt over the past year. Add energy to the mix, and a dry year like the ones that have gripped China since 2020 risks prompting a currency crisis and a visit to the International Monetary Fund.
Hydroelectricity remains a promising way for emerging countries to develop low-carbon electricity at low cost and on a large scale. However, this should not be considered a complete solution. Without the full range of renewable technologies, emerging Asia will not be able to obtain the energy it needs to develop.
More from Bloomberg Opinion:
• The political crisis in Pakistan was also an energy crisis: David Fickling
• Drought in Europe could have a long afterlife: Stephen Mihm
• Europe’s heat wave is bad for energy prices, but drought is worse: Javier Blas
This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
David Fickling is a Bloomberg Opinion columnist covering energy and commodities. Previously, he worked for Bloomberg News, the Wall Street Journal and the Financial Times.
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