China Post Securities has released a research report analyzing the latest five-year plan for renewable energy development. The core investment theme identifies that strategic importance has shifted from solely electricity generation to include non-electric applications, with chemical industries being a key sector for decarbonization and renewable energy substitution. The report recommends focusing on companies with integrated hydrogen, ammonia, and methanol project capabilities.
Furthermore, as China's carbon market expands and its trading mechanisms mature, more high-emission industries will be included. This will create a harsh cost environment for smaller, less efficient companies due to their high carbon compliance costs, accelerating the exit of outdated capacity. This trend is expected to benefit large, efficient, and well-prepared industry leaders.
The report's key points are based on the "Renewable Energy Development 15th Five-Year Plan" issued by the National Development and Reform Commission and the National Energy Administration. The plan outlines a development path with "electricity as the core and non-electric use as a breakthrough." It sets ambitious targets for 2030, including total renewable energy consumption of 1.8 billion tons of standard coal, a total installed capacity of wind and solar power exceeding 2.8 billion kilowatts, and a 1.5-fold increase in the scale of non-electric utilization compared to 2025. The elevation of non-electric use from a supplementary role to a strategic breakthrough is a major highlight of this plan.
Non-Electric Utilization as a Core Breakthrough, Four Main Pathways Defined
The plan's overall goal calls for a 1.5-fold increase in the total scale of non-electric renewable energy utilization by 2030 compared to 2025, equivalent to approximately 150 million tons of standard coal. Within this, the target for renewable hydrogen production is set to increase from 250,000 tons in 2025 to 2 million tons in 2030. A dedicated section of the plan outlines four clear pathways:
1. Green Hydrogen, Ammonia, and Methanol: The plan calls for coordinating factors like wind and solar resources, carbon sources, and water to plan and construct green hydrogen, ammonia, and methanol production bases. Three types of layouts are defined: bases in the northeast primarily for export; bases in the "Yellow River Bend," northern North China, and the northern foothills of the Tianshan Mountains for local use; and encouragement for weakly-grid-connected and off-grid wind-solar hydrogen production models. The policy direction is clear, prioritizing industrial consumption and strictly controlling projects that only produce and sell hydrogen.
2. Wind and Solar for Heating: On the industrial side, the plan supports the construction of nearby wind-solar central heating stations for industries like chemicals, textiles, pharmaceuticals, paper, and food processing. It encourages new projects in steel, cement, and other industries to adopt direct wind-solar power for electric arc furnaces and electric kilns. On the residential side, it promotes a model of centralized heating using wind-solar power combined with electric thermal storage boilers. This provides a significant pathway for the local consumption of new energy.
3. Diversified Use of Biomass Energy: The plan proposes vigorously promoting the transformation and upgrade of biomass power generation, shifting its role from a primary power source to a supplementary and regulating role. Non-electric directions include direct combustion of straw bales and biomass briquettes for heating; production of bio-natural gas from agricultural and forestry waste and kitchen waste; and the development of biodiesel, non-grain fuel ethanol, and bio-aviation kerosene for transportation applications.
4. Geothermal Energy for Heating and Cooling: The plan aims to strengthen the cluster utilization of shallow geothermal energy. In areas rich in geothermal resources, it promotes the centralized development and cascade utilization of medium-deep geothermal energy. Pilot projects are planned for locations such as the Beijing Sub-Center, the Xiong'an New Area, and Xianyang.
Risk Warning
The report identifies risks including the possibility that the implementation of policies may be weaker than expected, and that the commercial application of related technologies could lag behind schedule.
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