China’s power sector is likely to face serious challenges in the next few years, with coal risk potentially costing the nation up to $237 billion (£248bn).
That’s the prediction from a new Bloomberg New Energy Finance (BNEF) report, which suggests rapid growth, generous subsidies and regional competition in the last decade led to 35% oversupply across the country by the end of 2016.
Coal power generators are entering an unprecedented period of uncertainty as regulators tighten environmental regulations and cancel new projects.
BNEF suggests a slowdown in new build and the construction of long distance transmission lines to export electricity could play a major role in helping to alleviate these issues.
However, it expects the highest coal risk regions see little improvement in conditions – Inner Mongolia, Gansu, Shanxi, Jilin and Yunnan are all expected to see problems worsen going into 2020.
The report claims China is still constructing more than 120GW of new coal generation capacity and predicts the majority of these investments will significantly underperform.