China put a cap on renewable energy usage for aluminium production

According to a report on Friday, August 2, China has limited the usage of renewable energy for aluminium production. Shandong province, China's biggest aluminium producer, is allowed to account for 21 per cent of the total energy usage, while Inner Mongolia and Yunnan province are eligible to use up to 29 per cent and 70 per cent, respectively.

This move follows a drought-like situation in Yunnan due to erratic rainfall that hampered the area's hydroelectric power supply. In November 2023, Yunnan primary aluminium smelters were asked to reduce power consumption, leading to a production capacity cut of more than 1.1 million tonnes.

According to Kunming Power Exchange Centre, Yunnan's hydropower generation suffered a setback in 2023, as demonstrated in the graph below.

Yunnan Power Generation (TWh)

Source: Kunming Power Exchange Centre

Overall, Yunnan province in southwestern China is one of the highest generators of new energy power, with an installed capacity of about 35.9 million kilowatts, which is nearly 30 per cent of China's total capacity. In 2023, the province's new energy power generation totalled 41 billion kWh, up 56 per cent year-on-year, according to the Yunnan branch of the China Southern Power Grid Company Limited.

The company also stated that Yunnan's new energy utilisation rate reached 99.78 per cent last year.

According to statista.com, the solar power operational capacity in June 2024 was the highest in China's Xinjiang province at 38,117 megawatts, followed by Qinghai 28,450 megawatts, and Shanxi 25,632 megawatts. Yunnan was the ninth highest with a capacity of 20,353 megawatts.

By the end of 2025, China Hongqiao Group aims to move 4 million tonnes of its aluminium smelting capacity to take advantage of low-carbon energy. At the end of 2023, the company shifted 1.5 million tonnes of smelting capacity, which helped the entity slash carbon emissions by 30 per cent, the first step in eventually shifting all of Hongqiao's smelting away from coal-fired energy.

According to a report in June 2024, China cut the usage of thermal power by 4.3 per cent in May, the most significant drop since 2022. The usage of thermal power was largely replaced by hydroelectricity, as the generation of hydropower surged by 39 per cent in May after heavy rainfall set in. Power generation from solar farms also grew 29 per cent.