Ensuring the consumption of renewable power in China

Tao Ye, Deputy director of the China National Renewable Energy Centre, Energy Research Institute, National Development and Reform Commission

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Renewable energy industry important part part of the economic high-quality development but many barriers slow-down the development

Renewable energy has developed rapidly recent years in China as an important part of transforming the Chinese economy from mass-production to high-quality product and as important part of the energy system transformation.

However, several barriers exist for the consumption of renewable energy and slow down the further acceleration of the development of renewable energy.

Firstly, the slow-down in the growth of electricity consumption makes the competition between traditional power generation and renewable power generation more fierce.

Secondly, the local consumption of renewable energy is not used sufficiently, among other things due to grid barriers

Thirdly, the current dispatch of the power system restricts the use of renewable power due to favorable for the thermal power plants and rigid planning procedures for the dispatch, which makes it difficult to adjust to variable production from wind and solar power plants.

Fourthly, the power system as such is inflexible and existing flexibility is not sufficiently used to integrate renewable power.

Fifthly, the the power market development is slow and do not yet give incentives for fully integration of renewable energy, although the renewable energy law stipulates the “priority scheduling and full-guaranteed acquisition of renewable energy production”.

New rules for consumption of renewable energy

To overcome these barriers, the National Development and Reform Commission and the National Energy Administration have since 2018 prepared new rules for a consumption guarantee. After extensive hearing these new rules have now been formally issued. The intention is to ensure that the different market players with responsibility for power consumption work together on ensuring a minimum share of renewable energy as part of the whole power consumption.

From an overall perspective, the future development of renewable power has three different areas:

  • Formulate the strategic goals for renewable energy development and clarify the role of renewable energy in the future energy system
  • Clarify the economic incentives for the further development of the renewable energy sector, including tendering of new wind and solar power plants, suitable power purchase agreements in combination with efficient power markets, tax reduction for RE industry etc.
  • Ensure the consumption of renewable power by mandatory consumption shares.

The introduction of the mandatory consumption shares is not by itself aiming to solve the problem of economic viability for renewable energy but to ensure the consumption of renewable energy on the local level, based on the overall strategic goals for development of renewable energy. This requires strong coordination on the local level between authorities, grid companies and market players, and also coordination between provinces on cross-provincial exchange of renewable power. It is necessary to ensure the physical power consumption, hence it would be necessary to ensure the physical network connections to be able to match generation and consumption at the same time.

The role between the different key players are clearly defined. The local energy authorities takes the lead in organising implementation plans from the different involved institutions and monitor the implementation. The provincial grid companies and power trading companies are responsible for the implementation of the system through various means. On the state level, the energy administration monitor and evaluate the system implementation and set the specific consumption shares.

For the success of the new system it is important to ensure a unified scientific method for the actual setting of the consumption shares, to ensure the use of objective and accurate boundary conditions, and to ensure an open and transparent process for sharing of responsibility.

The new rules is important to ensure renewable energy in the energy transition

Implementation of the new rules is an important step forward to ensure the role of renewable energy in the energy transition towards a clean, low-carbon, safe and efficient energy system. The system encourages the shift from fossil fuel to renewables in the power sector, stimulates the local production and consumption of renewable energy in all provinces and put emphasis on the cross-provincial exchange of renewable power. The local grid companies and trading companies are encouraged to use different means to fulfil the obligations, including trading of excess power between areas and the use of the Green Card Trading platform.