Category Archives: Renewable Energy Policy

China 2012: Slowing down on RE deployment

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Fresh figures from China’s State Electricity Regulatory Commission (SERC) shows stagnation in the 2012 deployment of renewable energy in China. According to SERC, 15 GW of hydro power,  13 GW of wind power and 1 GW of solar power were established in 2012. These figures are less than the similar figures for 2011 for all three technologies.

The stagnation in the annual new installed capacity of wind power and solar power underline the serious and deep crisis for the Chinese RE industry. Both the wind industry and the solar industry are suffering from lack of orders and huge mismatch between production capacity and market demand.annual_installed_RE_capacity

NEA’s recent announcement of ambitions for 2013 aims to break the trend and to reestablish old growth trends. As shown in the figure comparing the annual installed capacity in 2010, 2011 and 2012 with the NEA ambitions for 2013: More hydro, more wind, and 10 times more solar!

 

2013 to become a big year for RE in China

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The National Energy Administration in China have high expectations for the development of renewable energy in China in 2013. The 12th 5 year plan for renewable energy, which was launched last year set the targets for 2015 for the various technologies at a fairly ambitious level; 260 GW hydro power, 100 GW grid connected wind power and 21 GW solar power should be installed by 2015. Compared to the 2011 level this gives average annual increases of 12 GW per year for hydro power, 13 GW per year for wind power and and 4.5 GW for solar power. But NEA now expect 21 GW hydro power, 18 GW wind power and 10 GW solar power to be installed in 2013 – all higher the the average yearly targets from the 12th 5 year plan.

nea-2013

So despite the current challenges for integration of renewables into the Chinese electricity grid, including lacking regulation and incentives for distributed solar power, NEA is quite optimistic or ambitious regarding the possibilities for deployment of RE in 2013.

Are the ambitions realistic? Well past experiences have shown that massive yearly deployment is possible, so it is difficult just to judge the 2013 targets as unrealistic. On the other hand the current challenges for integration and deployment cannot be easily delt with. Action is needed to avoid curtailment by making the electricity system much more flexible. And the deployment of solar power requires focus on large scale deployment of small scale solar power systems, roof-top and building integrated systems. And the barieres for such system might be underestimated when the 2013 targets were set. However, the signals from NEA is very encouraging: RE must have a bigger role in the Chinese energy supply in the future, and with these ambitions it is sure that a lot of effort will be made to quickly remore the barriers for deployment and integration of RE.

(Let me add that the figures might not be as easy to compare that shown. The figures for the 12th 5 year plan are grid-connected capacity, which for wind power make a big difference from the total installed capacity. It is not clear if the NEA 2013 figures also are grid-connected capacity or total installed capacity)

The minutes from the NEA working meeting where the targets were set, can be found on the NEA web site. The meeting ended up with eight focus areas for NEA in 2013, including increased domestic energy supply, more renewable energy, control of the total energy consumption, preparation of an energy sector reform, enhanced international energy cooperation, more research and demonstration, electricity to people without electricity supply, and strengthen of the management of the energy sector. It looks like a quite busy year for the energy administration, also in 2013 :-).

 

Strong analytic platform for RE policy research in China

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China National Renewable Energy Centre (CNREC) develops a comprehensive toolbox for development of policy strategies for renewable energy in China. 

Since the launch of CNREC in February 2012 much effort has been put into the development of an analytic platform which would enable the centre to make high quality research on policy strategies and RE development in China. The development has been inspired by international best practice solutions and especially researchers and experts from Denmark, Germany and United States have given valuable input to the development of the platform.

The platform consists of data, software-tools, methodologies and reports, supporting each other:

  1. The basic information about renewable energy technologies are currently being collected in a technology data catalogue for the most important RE technologies. Not only the current status is described but also the future development trends to 2050.
  2. A suite of simulation tools are being developed for comprehensive analyses of the impact of RE deployment for the whole Chinese energy system in form of scenarios for the development to 2050.
  3. A number of technology roadmaps are developed. Roadmaps for wind energy and biogas are already available at the CNREC information portal, and in 2013 roadmaps for solar energy and biofuel will be prepared.
  4. Several scenario studies are currently part of the CNREC-work portfolio. Focus is on how to obtain a high share of renewable energy in the Chinese energy system in 2050 and how to set up a feasible development path in order to realize such a vision.
  5. All these activities gives a solid basis for policy action plans on support schemes, regulatory initiatives etc.

CNREC Platform

A bit more elaborated description of the CNREC platform can be found in this presentation: CNREC recent development, which was one of the topics at a meeting in the Danish ThinkChina initiative in December 2012.

 

 

ERI: Make NEA an Energy Ministry focusing on demand side and non-fossil fuels

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In a remarkable clear report “China Energy Policy” the Energy Research Institute under NDRC (ERI) recommends much more focus on the energy demand side and on non-fossil energy supply. ERI recommends to strengthen in energy administration by increasing the National Energy Administration grow into an Energy Ministry taking more responsibility for the energy demand side from other ministries. Not only the energy intensity should be controlled but also the total energy consumption. And non-fossil fuels should have priority in the supply chain, reducing the current heavy dependency on coal and oil. Taxes and other financial policies should be the main driver for the future deployment of non-fossil fuels – basically renewables and nuclear power.

Stop expansion of long-distance transport of energy

Another interesting recommendation is to let import substitute long distance transport of coal and electricity from the North West China to the large energy consumers in the South East China. The idea that China should strive for coal self-sufficiency should be abandoned. Instead ERI suggest that the growth in energy consumption in the South East China should be covered by increased import of coal and LNG. Actually ERI finds that China by increasing the import of LNG could increase it’s pricing power. Last but not least ERI recommends that long-distance transport of electricity using Ultra High Voltage (UHV) transmission lines should be avoided due to the high cost and the increased risk for nation-wide power outages. The power supply of the South East coastal regions should be up to the the region itself. This recommendation is in sharp contrast to the current State Grid strategy where the UHV lines have an important role. Also the ERI recommendation could reduce the possibilities for obtaining a high share of renewables in China’s energy system as the resources of wind power and solar energy are focused in the North and North West of China. But nevertheless an interesting viewpoint worth further analyses in i.e. long term scenario analyses.

National and global conclusions and recommendations

“China Energy Policy” is a comprehensive analysis of the next five years development of the energy system in China, including 12 conclusions and 10 policy recommendations, covering both national  and international topics. Very interesting reading for everyone interested in the Chinese viewpoint on national and global energy policy. The executive summary can be found on this link, and a hardcopy of the whole report can be purchased on the ERI web site.

 

Next steps in reforming the Chinese power sector

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Power sector reforms are necessary to make the energy system sustainable. This is the message from top leaders in Chinas energy administration. Here is a suggestion for prudent next-step actions in this long-term reforming process.

Reforming the Chinese power sector is often mentioned as a prerequisite for developing a sustainable energy system with a large share of well-integrated renewable energy. See e.g. the article in CNRECs Energy Magazine written by Shi Lishan, Deputy Director of New Energy and Renewable Energy Department of the National Energy Administration NEA. But it is clear that China should not just copy other countries market reforms and market set-ups. After all, globally the market reforms still have to prove that they actually are promoting sustainable energy systems, and Chinas special context has to be taken into account when designing the reform process. So what to do?

Many ideas has been brought to the table, and one of the more convincing papers with ideas is actually more than one year old, but still highly relevant. The Regulatory Assistance Project published in september 2011 a draft paper: Power Sector Policy in China: Next Steps (Chinese version here) with the following suggestion for next-step actions:

  1. Develop improved planning methods to identify the least-cost mix of supply and demand-side options.
  2. Create an industry structure and competitive bidding processes to acquire the identified supply and demand-side resources in the least-cost manner.
  3. Adopt generation pricing and other practices to allow improved implementation of China’s new power plant dispatch rules.
  4. Redefine the role of transmission providers (i.e., the grid companies) to specifically address long-term system planning (including demand-side management), investment, dispatch, and renewables integration issues.
  5. Redefine the role of distribution companies to explicitly include investment in energy efficiency.

I am quite excited about this suggestions. The first precondition for changing the system is to change the planning system to focus on least-cost options. And combining supply planning with planning for cost-efficient demand side measures is basically very interesting in a country like China who now has adopted the “dual control” principle of setting targets for both the energy intensity and for the total consumption. Such a planning process is also well suited to an electricity system where the market reforms are not fully implemented. US and Europe introduced Least Cost Planning and Integrated Resources Planning in the 80’ties and early 90’ties for the big power producers, but this planning mechanisms disappeared again as a consequence of the market reforms. But for China a full market reform is risky in the sense of the small number of players leading to inefficient market pricing and market power situations and introducing such integrated planning methodologies in China makes sense to me.

Adressing the system dispatch principles is definitely one of the core actions to ensure a flexible and sustainable energy system. This also includes reforming the pricing mechanisms for the thermal power plants in order to ensure the survival of these plants even if the number of full load hours are reduced due to integration of renewables.

The paper is quite easy to read and in only 13 pages you get a quite good insight in the current situation (which has not changed since last year) as well as a good argumentation for the above mentioned next-step actions. Take a look at the paper and let me know what you think!

 

China’s challenging 2015 RE targets

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China’s twelve five-year plan set new targets for RE development towards 2015.

The plan include the following goals for 2015:

  1. RE should cover 9.5% of the total energy consumption
  2. RE should cover more than 20% of the total electricity production
  3. RE should play a significant role in the heating sector
  4. RE should be promoted by establishing 30 energy micro-grid demonstration projects, 100 New Energy cities, and 200 Green Energy Counties.

Let us look more at the targets for the power sector.

In 2015, the dominent RE source for power generation will be hydro power, covering around 76% of the total RE electricity generation. Wind energy will cover 16%, biomass power 6% and solar power 2%.

The 12-5 plan only present targets for 2015, not the years from 2011. But if you assume that the RE-development in % should be the same in the years to come, you get the following picture when focusing on wind energy, solar energy and biomass energy.

 

It is clear that wind power will continue to be the main provider of electricity, but actually the growth in deployment of wind will be significantly lower than in the last 5 year. In average the growth rate will be 27% for the years to 2015. More impressive is the targets for solar energy. Here the target is more than 2600% each year. Below are the development targets shown for each technology, including hydro power.

 

Until now the RE-development has surpassed all targets. But it might be a more challenging task to fulfill the new targets in the 12-5 plan. A number of barriers have to be removed in order to implement the 2015 targets:

For wind power and large scale solar power the integration into the energy systems are the most challenging task. Incentives for more flexible power plants, faster and better grid connection, wind turbines more suited for grid integration are some of the urgent measures.

For distributed energy like solar roof-top installations the regulatory framework, including feed-in tarifs (or net-meetering) and regulation for the grid companies on how to include local power production need to be in place.

And in general the massive development of RE technologies supported by economic incentives will soon drain the national support funding schemes and will require changes in the Renewable Energy Fund or additional funding sources.

The previous years have shown a clear will from both national and local governments to remove barriers for renewable energy, and I am quite confident that this will also happen in the years to come. However, the solutions should be implemented soon, if the RE development should continue in the expected pace.

A leaflet on the 12-5 plan RE-development is available in at www.cnrec.info.

 

 

 

 

Grid Integration of RE – lessons learnt from Europe

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This week I had the pleasure to visit the International Solar Energy Center (ISEC) in Lanzhou in Gansu and give a presentation ath the 9th International Summit on Solar and Wind Energy in Western China. The presentation gives a short overview of flexible energy systems and the latest development in trans-national grid planning in Europe.

The main messages are

  1. Flexible thermal power plant and flexible operation of the electricity and heating systems are key to integration of fluctuating wind and solar energy
  2. Institutional and economical barriers are serious challenges for a flexible energy system in China
  3. European experiences from the use of visions, scenarios and market studies before more detailed assessment of new grid project could be transferred to a Chinese context
  4. The challenges regarding grid planning and grid development in Europe and China are quite similar and mutual exchange of experience and solution would be benificial.

Find the presentation here: RE_integration_July_2012

 

EU and China strengthen cooperation on Low Carbon Economy

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The EU China Trading Project EUCTP launched last October a Low Carbon Economy Platform and  a web site, which gives assest to information about relevant events, documents and activities in the cooperation between EU an China.

Recently a new work program for the EUCTPs project on Low Carbon Economy was launched – focusing on a number of quite topical issues, like electricity market reforms, technical standards for integration of renewables, pricing and market regulation and access to the electricity markets in China and EU. Also activities regarding energy efficiency and demand side management are part of the work program as well as “smart cities” and emission trading systems. See the full overview of the work program here: Low_Carbon_Economy-Activity_Update_EUCTP_II.

 

 

Wind energy status in China

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My good friend, Jiang Liping, Vice president at State Grid Energy Research Institute, has an excellent blog with reflections on the development of energy in China. Recently she published an article which gives a status and prospects for wind energy in China. The article is written by leading wind energy experts and it gives a comprehensive overview of the development of wind energy, relevant regulation and support incentives, as well as an overview of current challenges regarding wind power integration. A must-read if you are interested in wind energy development!

 

My top 5 list for wind power integration in China

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30 March 2012 I had the pleasure to give a presentation on integration of renewables at the 2nd Grid Integration China week 2012.

My top 5 priority action list for improving integration of renewables looks like this:

  1. Incentives for a flexible energy system: Flexible thermal power plants, Flexible use of district heating, Better use of interconnectors
  2. Good wind power forecasts integrated in the system dispatch
  3. Reliable wind turbines: Grid code, Testing and certification
  4. New transmission grids
  5. Smart grids

My main point is, that the current challenges in wind power integration in China are linked to the incentives or rather the missing incentives for integration. Neither the dispatch centre nor the power producers have sufficient incentives to do an effort for integration of the electricity from wind power plants. If such incentives were put in place it would be fairly easy to make the existing system more flexible, and no new technology development is needed to ensure integration of up to at least 20 percent wind power into the electricity system. So this is my priority no 1.

If (or when!) these incentives are in place then of course it is very important to have reliable wind power prognoses in order to be able to make the right system dispatch and prepare for the use of regulating units in the operation hour. So good wind power forecast for system dispatch is my priority no 2.

Thirdly the wind farm should be able to enhance the system security, not to lower it. Therefore appropriate grid codes and certification of the wind turbines are essential for the further deployment of wind power. Luckily China recently approved good national grid codes for wind turbines, and certification has high priority.

Fourthly development of the grid is necessary to ensure a larger share of wind power and power from renewables in general. But notice that this in not the first priority. Nevertheless, grid development is a long-term discipline, so grid planning and timely development of the grid is very important, also in the short run.

Finally development of “smart grid” concepts should be promoted. The smart grid do not need to be smart-smart, but especially with focus on the demand side flexibility and the use of electricity for transport and heating require a more advanced information flow about prices to work dynamically. In the long run, the system security would need more advanced control mechanisms to ensure the dynamic security of supply.

You can download my presentation here: RE_integration_March_2012 (2.4 MB).

The presentation gives a short wrap-up of the conclusion from the two recent reports on wind power: the China Wind Energy Development Roadmap 2050, developed by Energy Research Institute and IEA, and the report on Integrated Solution Strategies, developed by SGERI and VESTAS. And a short introduction to China National Renewable Energy Centre :-).