Monthly Archives: October 2012

RE Magazine 3

High expectations for solar PV development in China – but can they be met?

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The solar PV development in China and in the world are one of the main themes in the brand new issue of China Renewable Energy Magazine from CNREC 

Experts from Energy Research Institute of NDRC, China Photovoltaic Society and State Grid Energy Research Institute give in the new issue of the CNREC RE Magazine a quite comprehensive and in-depth view of the recent and future development of the solar PV industry and market (the figures below are from the magazine).

The 12th 5-year plan set out clear and ambitious targets for the development of solar PV in China. 20 GW installed capacity is the target for 2015 and 50 GW is the target for 2050. In 2011 3.5 GW is installed. The plan focuses both on large PV power plants and on distributed PV systems, including roof-top and building integrated installations. But is it possible to have such a rapid development in China the next 5-10 years?


From an incentive point of view, Wang Sicheng from NDRCs Energy Research Institute (ERI) points out that the RE law from 2005 and 2009 is a sufficient overarching framework for the development of solar PV in China. The law has been follow by detailed implementation of support schemes for demonstration project and a Feed-In Tariff (FIT) for large PV power plants. Nevertheless there are still a number of barriers for the large PV installations:

  • Difficulties in connection to the transmission grid
  • High Land use tax
  • Unclear lenght of the FIT subsidy
  • Severe delays in the payment of the subsidy
  • Bad timing between planning of the PV power plants and the grid planning

The development of distributed PV installations has until now happened as part of the demonstration programs, e.g. the Golden Sun projects. And here the development has run into  a series of barriers:

  • Difficulties in connecting to the distribution net
  • Difficulties in setting up contracts with the grid companies
  • Unclear or missing standards for grid connection etc.
Wang Sicheng point to clear and comprehensive planning procedures for the large PV plants, technical and pricing standards as main components for implementing the targets for solar PV in China. Also allowing developers to construct distributed system on buildings owned by others would help the implementation. And first of all – clear rules for the subsidies for all in form of reasonable FIT instead of investment grants.

Zhao Yuwen from China Photovoltaic Society (CRES) look at the solar PV development from an industry point of view. In general he agrees with the ideas of promoting FIT for solar PV and to have better timing between grid and solar PV development. On top of this he points to some industry specific challenges. It is a big challenge for the Chinese solar PV industry that the Chinese market only is around 10 percent of the Chinese production. A more solid home market is needed to avoid severe damage from protectionism in international trade. Furthermore the Chinese solar PV industry have problems to become competitive with foreign manufactures when it comes to some of the components in solar PV panels, e.g. polycrystalline silicon and some high-end raw and auxiliary materials.

Finally Cao Shiya from the State Grid Energy Research Institute looks at the technical and economic development of different solar PV systems. One of the main points is that the rapid development of installations allows for further improvement of the levelized cost of electricity from solar PV. He expects the cost to be half of the current cost in 2020.

There is a wealth of information about the past, present and future development of solar PV systems in all three articles, not only for China but also for the global development. If you are interested in solar PV in China, CNRECs 3th RE Magazine is a must-read. On top of this you get a lot of other interesting article about policy, industry and data about renewable energy. Download the Magazine from CNREC web site in Chinese or English.


Reducing Beijings air pollution – steps in the right direction

In the small streets of Beijing is is very common to see bike-trucks loaded with coal briquettes, especially when the heating season starts. These briquettes fits nicely into the small stoves in the hutongs and has been the prime source of energy for heating and cooking for the households in Beijing. But the coal burning is contributing to the heavy air pollution in Beijing and the Beijing government thus wants to reduce the use of the briquettes.

coal briquettes in China

Since 2003 (after a pilot period from 2001) the government has supported a program for installing electricity for heating and cooking in inner Beijing. In 2012 21,000 households will get rid of the coal stove which brings the total number of households switching from coal to electricity to more than 200,000 since the beginning of the program. The households receive a subsidy to the electricity price in the night time in order to make it able to compete with the cheap coal. See the information from NDRC here (in Chinese)

The massive amount of cars in Beijing are often blamed for the air pollution. But actually the coal consumption is a worse polluter. Of course the coal fired coal plants in the Beijing area are big sinners but also these small stoves which leads the pollution directly into the streets and houses are very unhealthy – like the London smog years ago, that mainly was created by small coal stoves. So this program is definitely a step in the right direction for the whitings. In other areas in Beijing district heating is a more sustainable solution. Beijing has Chinas largest district heating company, Beijing District Heating Group which has extensive cooperation with international companies including Danish companies e.g. as part of the energy cooperation between the City of Copenhagen and the City of Beijing. One of the challenging issues regarding district heating is to change the payment from an area-based payment to a payment based on actual consumption. This is needed in the process of enhancing energy efficiency but requires installation of meters and a new set-up of accounting – a long-term process.

Beijing District Heating Group owns some of the power plants in the Beijing area, delivering heat to the district heating system. And the power plants does not only contribute to the local pollution but also to the global CO2 emission. If you want to monitor the emission of CO2 from power plants in Beijing (or other places in the world) have a look at the Carma website. I haven’t checked the accuracy of the Chinese data, but the web site in it self look interesting. As mentioned in an earlier blog, Beijing is about to change the coal fired power plants into natural gas fired plants before 2015, and this should of course be reflected on the web site when the changes happens.

The Beijing air-pollution is still a major problem for people living in the city. But the steps taken are all steps in the right direction – and I would say, the steps are more than needed!


Next steps in reforming the Chinese power sector

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 herewith 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 to become new Global Green Growth Forum Partner

When the 2012 Global Green Growth Forum (3GF) opens in Copenhagen on 8 October a high-level Chinese delegation lead by NEA viceminister Liu Qi will be among the participants, and China will formally be new partner in the cooperation, which include Denmark, the Republic of Korea and Mexico. Also Qatar and Kenya will be new partners.

The 3GF is an alliance focusing on international cooperation between government as private companies on a steady and rapid green growth. The 2012 Forum has “resource efficiency and growth as overarching theme with a number of different seminars during the two-day event. China has a special country session and will also be active in other seminars.

Find the agenda and more information about the 2012 3GF here. I will follow up after the forum in a new blog entry.