Power adapter

Consensus needs to be reached on how to overcome a number of pressing challenges in order to successfully decarbonize China's power sector

China has pledged to peak its carbon emissions before 2030 and achieve carbon neutrality before 2060. Power system decarbonization will be one of the main focus areas for achieving the "dual carbon" target since it accounts for about 40 percent of China's overall carbon emissions.

To achieve the decarbonization goals, the characteristics of China's existing power system and the challenges of its decarbonization have to be analyzed and identified and a suitable new power system has to be explored and established.

Although the physical laws governing power systems are universally the same, the characteristics of each power system can be quite different. China's power sector is characterized by its heavy dependency on coal power generation, the remoteness of sources of renewable energy generation from major load centers, and the lack of exposure to price signals for the end-users.

Given the characteristics of its power system and its ongoing industrialization and urbanization, which mean its electricity demand continues to grow, China inevitably faces a number of critical challenges. Renewable energy must be developed on a large scale not only to replace the existing coal power plants but also to meet the additional demand growth in the future. Greater power system flexibility is critical because of the need for balancing the volatility on both the supply and demand sides. But the transition from coal power is lacking short-term alternatives to provide the system the kind of flexibility traditionally borne by coal-fired power plants. Long-distance renewable energy transmission is much needed since China's renewable energy and load centers are located far apart. Reform of the electricity market needs to be accelerated to achieve optimal resource allocation for power production, transmission and consumption.

To meet all these challenges and construct a new power system suitable for China's national situation, the focus needs to be on the following four key areas: Ensuring sustainable development of renewable energy, clarifying the pace of the coal power transition, keeping the grid planning and system dispatch operation up to date and enabling elasticity on the demand side.

Although the levelized cost of energy of wind and solar power has been reduced dramatically, renewable energy developers still have concerns about future investment because of the uncertainty of cost recovery caused by the removal of government subsidies. Thus, long-term contracts or auction mechanisms are needed to provide certainty for investment in renewables. Besides, government incentive measures are still needed for certain promising renewable technologies that are not yet cost-effective at their early stage, such as offshore wind power and solar thermal power.

Since offshore wind power is closer to the major load centers in the eastern region of China, it should be the next major renewable technology to be focused on with favorable policies and incentives.

The alarming power crunch in 2021 underlines the fact that when phrasing out coal to ensure climate security, it is equally important to secure a reliable supply of power. To support system flexibility, a certain portfolio of coal power plants will continue to play the role in providing such needs, and diversified energy storage technologies have to be developed at scale to provide daily and seasonal system flexibility before coal power is phased out at scale. Also, carbon capture, utilization and storage should play an important role in keeping a small fleet of coal power plants in service to guarantee system flexibility and reserve capacity.

China's grid companies have already adopted the most advanced technologies. Still, to significantly increase the proportion of renewable energy in the country's power generation mix, grid planning and operation have to be further improved in a way that can meet the changing dynamics. Economic power dispatching based on market signals should ultimately be the norm for system operation. Also, the sustainability of the existing pattern of large-scale west-to-east renewable energy transmission needs to be reconsidered. One alternative could be to develop large scale offshore wind power as well as distributed renewables that are much closer to the load centers to avoid the costly long-distance energy transmission.

Also, a low-carbon, high-efficiency power system can only be achieved if the demand side is participating in the power balancing.

A variety of technical solutions including micro-grids, virtual power plants, and other things need to be developed on an economic scale to make the demand side controllable, so it can be adjusted by the grid operator for real-time power balancing.

The steps for power market reform are expected to focus on establishing real-time price signals to prompt electricity users to adjust their power usage and to enable buyers to be able to purchase green power under longer term contracts which will help accommodate the price premium.

In conclusion, despite the strong willingness and diverse practices, there is still a lack of an industry-wide consensus on a comprehensive response strategy to the challenges before the decarbonization of China's power system can be realized. Therefore, there is an urgent need to bring together decision-makers, top industry experts, and policy designers to explore the concepts, promote the best practices, and jointly plan the road map for China's new power system with renewables as the mainstay.

Zhou Qin is a senior fellow at the RMI China. Liu Yujing is a manager at the RMI China. The authors contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn