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The nationwide power outages of late last summer are probably still fresh in the minds of many in China. Millions were left in the dark, and entire factories came to a standstill – with repercussions for supply chains around the globe. This put the guarantee of power security through the expansion of energy storage at the top of the agenda of China’s leadership. And Beijing has big plans, analyzes Nico Beckert. Nevertheless, it is already clear that even billions invested in the ongoing energy transition will not make the grids perfectly secure.
German carmakers in China, especially, have been waiting a long time for this step: the relaxation of joint venture requirements. This obligation dictated that foreign manufacturers could never hold more than 50 percent of a Chinese company and could only operate joint ventures with domestic partners. In the commercial vehicle business, this requirement was dropped two years ago; foreign manufacturers of electric and hybrid cars were already exempt from it. Since the beginning of the year, the requirement to cooperate with domestic companies has largely been lifted for the entire industry. But not all players are happy with this relaxation, writes Christian Domke Seidel in his analysis on the abolition of the joint venture requirement. Because the relaxation comes with a catch.
Those who attended our live event China-Strategy 2022 on Tuesday, unfortunately, encountered some very unfortunate problems with their Zoom access and especially the sound quality. Some of us had noticed during the event that the speakers from China, of all places, could be heard relatively well, while those from Germany could not. Now, the most unlikely cause for us has actually been confirmed: On Tuesday of all days, Germany’s Telekom struggled with significant network outages throughout the country. In China, on the other hand, Zoom servers had an excellent connection. This once again confirms: Compared to China, Germany is still a developing country in all things digital.
Power storage – an important component of the energy transition
Last fall, China experienced a dramatic demonstration of just how delicate the issue of power security can be: Due to bottlenecks, numerous provinces were forced to ration power. Not only did the lights go out in private households, but factories also came to a standstill. This came as a shock to China’s political elites, and foreign investors also viewed the situation with concern.
To ensure that this does not happen again, Beijing is making power security an important goal. However, the energy transition is not to be abandoned. On the contrary: China wants to double its power generation capacity from sun and wind to 1,200 gigawatts by 2030. Coal-fired power is to continue to be forced out of the grid in the long term.
The expansion of power storage is essential for driving the energy transition forward while ensuring a reliable power supply. China is facing the same problems as Germany: Sometimes the wind and sun supply more power than is needed, sometimes there is a lull. The results are power shortages and an unstable grid. Pumped-storage power plants and battery storage systems can absorb renewable energies in times of surplus and feed them back into the grid in the so-called dark doldrums or when power demand is high.