mechanisms sits with China, should China
choose to pursue this strategy of utilising multilateral platforms and regional forums, it is likely
to deliver greater win-win and optimal outcomes
for all countries.
8.6 Risks and Obstacles
Data sharing on metals and minerals markets is
politically challenging, not least because of its
links to both national security and financial
markets (where stockpiles and metal warehousing are concerned). However, if China chose to
take a lead in this area, this could increase trust
and demonstrate a commitment to greater transparency. Progress has been possible in other,
arguably more sensitive, areas such as energy
and food.
At the same time, relatively little governance
architecture exists at present, so there is minimal
risk of disrupting or undermining international
norms. Relatively low prices take some of the
heat out of metals and minerals markets and
provide political space for governance reforms.
China already has strong trade and investment
links with Australia, Argentina, the Democratic
Republic of the Congo and Chile—although
these will require sensitive management as the
geopolitics of individual players on the supply
side shifts, and as international competition for
access to resource contracts increases.
9 Electricity Reliability During
the Shift from Molecules
to Electrons
The pace at which solar photovoltaic, wind and
electric vehicle battery pack prices keep falling is
accelerating the fundamental shift of the energy
transition—from molecules to electrons.
As early as 2014, onshore wind delivered
electricity in Europe at $50 per megawatt-hour
(MWh) without subsidies, compared to $45–
140/MWh for fossil fuel power plants. The trend
of renewables becoming increasingly cheaper
than fossil fuel generation across jurisdictions is
clear. In China, both solar and onshore wind’s
levelised cost of energy is likely to be cheaper
than coal and gas by 2028 (both are already
cheaper than gas power stations). In Germany,
solar and onshore wind are already cheaper than
coal and gas; in the USA they are likely to
become cheaper as early as 2024. It is therefore
no surprise that renewables have increased their
share of global new capacity additions from 8.5%
in 2002 to 42.6% in 2015.
One of the principal solutions for achieving
security of supply or balanced electricity systems
with a high penetration of renewables, while
reducing curtailment, is the increased trade of
electricity through power interconnectors. While
high voltage cross-border interconnector capacity
is expanding rapidly—growing by 81% in the
10 years up to 2015—and is likely to double by
2025, China, and Asia as a whole, has limited
interconnection to its neighbours, relative to its
renewable power generation. In Europe, around
23 MW of interconnection capacity exists per
GWh of renewable generation, whereas China’s
interconnection to Russia is equivalent to 3 MW
per GWh.
3 Based on announced and planned
projects, this will rise to 9 MW per GWh. More
interconnections in China would reduce wind
(17%) and solar (10%) curtailment and stem the
rising amount of hydropower dumped in Sichuan
and Yunnan provinces—142 and 314 TWh
respectively in 2014—a fivefold and sixfold
increase on the previous year.
EV penetration rates are also set to increase
dramatically. In 2016, EV sales grew by 55%, 20
times greater than internal combustion engine
(ICE) vehicles. EV lithium-ion battery costs have
collapsed by three-quarters over the past six years,
with a further 30% reduction likely by the end of
the decade as global manufacturing capacity looks
set to increase sixfold by 2020.
4 The point at
which the total cost of running an EV reaches
parity with ICE vehicles is widely expected in the
next decade or so. By 2040, Bloomberg New
Energy Finance (BNEF) expects EVs to account
for more than half of all new vehicle sales and a
3
Chatham House calculations.
4
Relative to 2016, based on company announcements.
Special Report 5: International Energy Cooperation and Governance
655
choose to pursue this strategy of utilising multilateral platforms and regional forums, it is likely
to deliver greater win-win and optimal outcomes
for all countries.
8.6 Risks and Obstacles
Data sharing on metals and minerals markets is
politically challenging, not least because of its
links to both national security and financial
markets (where stockpiles and metal warehousing are concerned). However, if China chose to
take a lead in this area, this could increase trust
and demonstrate a commitment to greater transparency. Progress has been possible in other,
arguably more sensitive, areas such as energy
and food.
At the same time, relatively little governance
architecture exists at present, so there is minimal
risk of disrupting or undermining international
norms. Relatively low prices take some of the
heat out of metals and minerals markets and
provide political space for governance reforms.
China already has strong trade and investment
links with Australia, Argentina, the Democratic
Republic of the Congo and Chile—although
these will require sensitive management as the
geopolitics of individual players on the supply
side shifts, and as international competition for
access to resource contracts increases.
9 Electricity Reliability During
the Shift from Molecules
to Electrons
The pace at which solar photovoltaic, wind and
electric vehicle battery pack prices keep falling is
accelerating the fundamental shift of the energy
transition—from molecules to electrons.
As early as 2014, onshore wind delivered
electricity in Europe at $50 per megawatt-hour
(MWh) without subsidies, compared to $45–
140/MWh for fossil fuel power plants. The trend
of renewables becoming increasingly cheaper
than fossil fuel generation across jurisdictions is
clear. In China, both solar and onshore wind’s
levelised cost of energy is likely to be cheaper
than coal and gas by 2028 (both are already
cheaper than gas power stations). In Germany,
solar and onshore wind are already cheaper than
coal and gas; in the USA they are likely to
become cheaper as early as 2024. It is therefore
no surprise that renewables have increased their
share of global new capacity additions from 8.5%
in 2002 to 42.6% in 2015.
One of the principal solutions for achieving
security of supply or balanced electricity systems
with a high penetration of renewables, while
reducing curtailment, is the increased trade of
electricity through power interconnectors. While
high voltage cross-border interconnector capacity
is expanding rapidly—growing by 81% in the
10 years up to 2015—and is likely to double by
2025, China, and Asia as a whole, has limited
interconnection to its neighbours, relative to its
renewable power generation. In Europe, around
23 MW of interconnection capacity exists per
GWh of renewable generation, whereas China’s
interconnection to Russia is equivalent to 3 MW
per GWh.
3 Based on announced and planned
projects, this will rise to 9 MW per GWh. More
interconnections in China would reduce wind
(17%) and solar (10%) curtailment and stem the
rising amount of hydropower dumped in Sichuan
and Yunnan provinces—142 and 314 TWh
respectively in 2014—a fivefold and sixfold
increase on the previous year.
EV penetration rates are also set to increase
dramatically. In 2016, EV sales grew by 55%, 20
times greater than internal combustion engine
(ICE) vehicles. EV lithium-ion battery costs have
collapsed by three-quarters over the past six years,
with a further 30% reduction likely by the end of
the decade as global manufacturing capacity looks
set to increase sixfold by 2020.
4 The point at
which the total cost of running an EV reaches
parity with ICE vehicles is widely expected in the
next decade or so. By 2040, Bloomberg New
Energy Finance (BNEF) expects EVs to account
for more than half of all new vehicle sales and a
3
Chatham House calculations.
4
Relative to 2016, based on company announcements.
Special Report 5: International Energy Cooperation and Governance
655