Case studies

A review of CLP’s progress in decarbonisation over the last decade

2020 is a milestone year for CLP’s Climate Vision 2050 targets. Looking back over the last decade, CLP has been actively investing in renewable and non-carbon energy generation to decarbonise its portfolio.

CLP has made strategic investments to decarbonise its power generation over the years, despite the fact that the Company's carbon intensity temporarily increased:

• In 2013 when CLP acquired the Mount Piper and Wallerawang Power Stations as part of the NSW electricity privatisation process; and
• In 2014 when the equity share of Hong Kong’s fossil-fuel portfolio increased from 40% to 70%.

Irrespective, the Company remained focused on growing the share of renewable and nuclear energy, including purchasing renewable energy capacity through long-term power purchase agreements. Combined with operational efficiency measures, the Group’s carbon intensity declined by 28% from 0.80kgCO₂/kWh in 2010 to 0.57kgCO₂/kWh in 2020 .

The clean energy targets set back in 2010 were based on high growth assumptions. By 2011, the initial renewable target of 5% of total capacity was met at 11.3%, and by 2012, it reached an encouraging 20.2%, which at the time already surpassed the 2020 renewables capacity target. However, changes in the Group’s ownership of its subsidiaries in the past few years has reduced its renewable and non-carbon capacities to 13.5% and 24.4% respectively.

Most notably, in 2018, the Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) took a 40% equity share in CLP India, which included 1,094MW of gross renewables capacity at the time. This strategic partnership with CDPQ is based on the premise of expanding CLP India’s low-carbon business in the long-term. An additional 400MW of renewable capacity has been added by CLP India, since this partnership with CDPQ has been formalised.

Over the last three years, market-based support mechanisms for renewables projects have in many cases been halted, often due to expectations that the levelised cost of energy (LCOE) has dropped to such a level that subsidies are no longer required. As an additional complexity for CLP’s existing renewable assets, receivables for national subsidies in China and receivables for revenues in India have reached a total of HK$2.5 billion in 2020. This combination of factors has made the addition of renewable investments into the CLP portfolio more challenging. Nevertheless, besides the additional renewables capacity in India, CLP’s businesses in Mainland China and Australia continue to support renewables in their portfolios.

As the Company takes stock of its performance in the last decade, CLP’s current target review will need to balance the different expectations from stakeholders, government policies, technologies and market realities.