While China’s coal consumption growth has slowed down, and fell in 2014, coal-fired power generating capacity continues to grow rapidly. This apparent contradiction has led some observers to conclude that China’s coal consumption growth is bound to resume. In reality, continued buildup of coal-fired power plants represents an investment bubble that will burst as overcapacity becomes too large to ignore.
If there is one factoid that every media consumer knows about energy in China, it must be that the country is “building one coal power plant per week”. While coal-fired power generation capacity growth has slowed from the peak years – 2006 saw the equivalent of 1.5 large units added every week – the rate of coal-fired power plant additions and construction initiations in China is still breathtaking: 39 gigawatts were added in 2014, or three 1000MW units every four weeks, up from 36 gigawatts in 2013.