Time for more flexibility in the Chinese power system

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Lack of flexibility is one of the biggest obstacles for integration of fluctuating renewable energy in the Chinese power system. The thermal power plants and the transmission grid are currently operated too inflexible, which especially in North China results in massive curtailment of wind power.

Looking more into the problems reveals both technical challenges, lack of economic incentives and regulatory issues as the main reasons for this inflexibility, which damages the further development of renewable energy in China.

Fortunately experiences from other countries show that these problems can be overcome. In Europe curtailment of renewable energy is very small, even in areas with much higher share of renewable energy that in the Northern China.

One of the secrets behind Denmark’s large share of wind power is the extreme flexibility of the thermal fossil fired power plants. Due to years of continuous effort, most of the Danish power plants have very low minimum capacity output for on-grid operation, they have fast up and down regulating capabilities, and they are able to have a quick start-up from zero to full load, compared to power plants in other countries. Establishment of a time-dynamic pricing for power purchase via a well-functioning market has been a strong motivator for this development. The dynamic pricing, with high prices when the demand is high and uncontrolled power supply is low and visa versa, send a clear signal to the power producers when to produce and when to avoid producing.

 

Danish experiences were presented at a CNREC-RED expert meeting on flexible power plants 4 December 2013

Danish experiences were presented at a CNREC-RED expert meeting on flexible power plants 4 December 2013

Flexibility for the thermal power plants was the topic to an expert meeting on 4 December 2013, arranged by CNREC and the Sino-Danish RED program. Experts from Denmark shared their experience in how to make coal-fired power plants more flexible. The meeting also discussed the lack of economic incentives for the Chinese power producers to operate more flexibility.

You can find more information about the meeting and the presentations from the meeting here.

 

Should China link eco-tax and RE subsidies?

CNREC and IISD looks at green revenues for green energy

Earmarked revenues from enviromental taxes could be one of the ways forward for China to ensure the needed subsidies for it’s ambitious development plans for renewables. The International Institute for Sustainable Development (IISD) and the China National Renewable Energy Centre (CNREC) are currently finalising a report on this issue, looking at best-practice examples from other countries and the implications for China.

Summary report on Green Revenues for Green Energy

Summary report on Green Revenues for Green Energy

The preliminary results of the analyses has been published in a summary report, and while we wait for the whole report to be ready, here are the key issues and findings:
1. Environmental taxes can be pro-growth and pro-competitiveness
2. Revenue stability can be ensured with adjustments, price caps and price floors
3. Revenues can promote renewables, as well as protecting the vulnerable, improving  competitiveness and building policy acceptance
4. Policy stability increases leveraging of private finance
5. Multiple environmental fiscal policies, including taxes and trading schemes, can and do coexist in many countries
6. Renewable energy revenues need good management and governance if they are to achieve targeted objecives efficently.

These bullit points are explained in more detail in the summary report. Download it here!

 

China: Social, economic and environmental development must be coordinated

New report from CCICED on China’s environmental protection and social development

At the annual meeting 13 to 15 November 2013 in the China Council for International Cooperation on Environment and Development (CCICED) a Task Force for China’s environmental protection and social development launched a summary report with 6 recommendations for how to ensure development of an “Ecological Civilisation”. This vision includes a harmonious society, sharing the fruits of development and safeguarding social justice and equity, but there is an urgent need to deepen the currently weak understanding of environmental and social relationships, and to identify priority fields for action in order to achieve this vision.

The task force operates with a framework for policymakers: 1) Awareness, 2) behaviour and participation, and 3) coordinated governance. The report points to the more soft topics in the necessary transformation of the Chinese society with focus on sustainability and environmental protection, and it sets up a model for how environmental behaviour, public environmental governance and environmental values can be coordinated and jointly developed.

The six recommendations from the Task Force starts with a recommendation on elaboration a vision of coordinated social, economic and environmental development for 2050 and development of a phased plan of policy and actions for the period to 2020. The recommendations also points to a number of activities within the next years to strengthen the long-term vision and the practical next-steps towards more environmental awareness, behaviour and governance. As example, the report suggest that the next five-year plan should be listed as the National Economic, Social and Environmental Development Plan, so that environmental policy and the associated planning will become a significant item in parallel with economic and social policies. Also and Environmental Impact Accessments (EIAs) should be introduced for major policies.

Policy and action framework - from the CCICED report

Policy and action framework – from the CCICED report

 

The Task Force comprises both Chinese and international experts, including high-level people from the Research Office of the State Council and from the Energy Research Institute under NDRC. It is definitely worth reading. Find the report at CCICED website.

 

Bio-energy a hit in China

Bio-energy is a hit in China. At least if you judge by the overwhelming interest from Chinese participants in the 2013 China International Bio-energy Summit, which were held on 4 and 5 July.

2013_China_International_Bio-Energy_Summit___Expo

Both the plenum sessions and the more technical parallel sessions were quite packed with  participants with appetite on knowing more about the possibilities in biomass and bio-energy for China. I had the fortune to be invited to moderate a plenum session on regional experiences on the use of biomass for energy in Canada, Denmark, Austria and Brazil, which gave both an impressive and kaleidoscopic overview of the many different possibilities for use of bio-energy – from power and heating production to biofuels in various forms.

The second day I hade a brief introduction to the Danish biomass experiences for heating, which started in the 1980’ties. Today biomass has an important role in Denmark’s ambitious target for a non-fossil fuel free energy system in 2050. See my presentation here: biomass for heating in Denmark-handouts.

 

Danmark 2012: 30% wind power and no curtailment at all – how is it possible?

2012 was a new record year for wind power in Denmark. Last year the wind power production in Denmark amounted to 30% of the Danish electricity consumption, while in 2011 the figure was 28,2%. This is of course good news for the global environment but due to Denmark’s small size the biggest contribution to the global environment might not be the CO2 reduction itself but the Danish showcase: It is possible to have a high share of fluctuating electricity production in the energy system without curtailment at all. And 30% is only a step towards the even more ambitious target of 50% in 2020. Right now the next off-shore wind farm is being established in Denmark – see the pictures here. (The picture below is the Danish wind farm Middelgrunden near Copenhagen on a cloudy October day in 2012).

Middelgrunden near Copenhagen

But what is the secret behind the large share of wind power, and what can China learn from Denmark?

A number of factors enables the high wind power penetration. Denmark has strong transmission lines to the neighbouring countries and access to hydro power storage in Norway. And a well functioning electricity market ensures optimal use of these interconnectors and the optimal combination of wind power and hydro power. The dynamic pricing of electricity created by the electricity market send price signals hour by hour to the producers and consumers. When the electricity production is high due to wind power and combined heat and power production (CHP), the electricity price is low; and when the wind power production is low (or zero) the price gets higher. This system also gives strong incentives for the power producers to make their thermal power plants more flexible. In facts, some of the coal fired power plants in Denmark can produce electricity and heat at a level of 10% of their maximum capacity. In China the requirements for minimum production is 50% of the max. capacity for the coal-fired power plants. All Danish CHP plants have also heat storage attached, which makes it easier to decouple heat and power production. When the electricity price is high, the CHP plants produces electricity and surplus heat can be stored in the heat storage, which basically is a large water tank. When the electricity price is low, the heat consumption is covered by the heat storage alone. And when the electricity price is very low, it can be beneficial to use electricity to warm up the water in the heat storage instead of running the thermal CHP plant. The combination of wind power, hydro power and thermal CHP plants with heat storage gives a very flexible system which is the physical explanation behind the high RE share in the Danish electricity supply.

To fully understand the Danish success of integrating wind power, you should also take into account the institutional and the “mental” framework for the electricity supply sector. In many countries – also in China – wind power is often regarded as an “add-on” to the “normal” electricity supply based on thermal power plants – fossil fuel or nuclear. The add-on RE power then is supposed to take care of its own problems, e.g. balancing the fluctuating production, and if it is not possible, then the easy solution is to curtail it, e.g. to stop the production from the wind farms, because the wind farm is causing the problem. But in Denmark, wind power is regarding as an integrated part of the electricity supply. Balancing problems is therefore a system problem, not a problem for the wind farms. This mental change in the perception of the electricity system is important for solving the integration challenges. Also the institutional set-up is important. Years ago the electricity sector was one integrated monopoly. Today the Danish grid operator (or Transmission System Operator – TSO) have been totally independent of the electricity producers for more than 12 years and it acts totally neutrally towards all power producers. Furthermore the large power producers in Denmark owns a large share of the wind power plants and integrate them into their portfolio of power plants in the daily operation. And by setting ambitious goals for the further development of RE power in Denmark (50% in 2020, 100% in 2050) the Danish government encourage both the TSO and the power producers to integrate RE in their planning process. The long term grid planning is thereby targeted at making these goal feasible, not only in Denmark but also in a European context, where the European TSO’s makes 10 years grid plans every second year.

And what are the lessons learned for China?

Firstly it is important to start considering RE power as part of the whole electricity system, not as an add-on to the thermal power system. Secondly it is urgent to setup economic incentives for flexibility for the power producers and for the use of local and regional transmission lines. Dynamic pricing is essential, but it is not necessary to introduce a complete market-setup to create this – a system with the system dispatch centres as vehicles for flexibility could be establish without a full market, like in Denmark where the electricity market evolved over a number of years, starting with more simple measures. When such economic incentives are in place, I am quite sure that the technical solution like flexible thermal power plant and heat storage at the CHP plants would develop rapidly.

Also an integrated planning process combining grid planning with planning for energy efficiency and energy supply would strengthen the integration of renewables, the development of smart grids and the use of the energy demand as part of the overall system flexibility. Maybe China could get inspiration from the European approach with the 10 year grid development plans and market studies with an even longer time horizon.

Of course China is China, and she has to develop her own solutions to the energy challenges. The Danish experiences and lessons in integration of RE can however support the analytic development of measures, methodologies and processes, which are necessary for the development of a sustainable energy system with a high share of RE in China. The Sino-Danish RED program is one example on how China and Denmark work together on such a development.

 

Kick-off of the China Solar Roadmap

This week the preparation of a comprehensive Chinese solar roadmap was launched in Beijing. The roadmap will look at solar PV, concentrated solar power (CSP) and solar thermal technologies and analyse the technology development trends, international and national market trends as well as the possibilities and challenges for the Chinese solar manufactures. The roadmap will be finalised by the end of 2013. Solar_thermal_in_Beijing

The Solar Roadmap is sponsored by the Sino-Danish Renewable Energy Development (RED) Program and it is supervised by the China National Renewable Energy Centre – CNREC. The analyses will be carried out by a large number of leading Chinese experts under the umbrella of China Renewable Energy Society supported by international solar experts participating in the IEA Solar Technology Initiatives.

At the kick-off meeting on 29 January 2013 I had the possibility to wrap up the plenum discussion with these words:

“We already have a number of international and national solar roadmap and it is of course very useful to learn from these experiences. But it is also important to realise that the Chinese roadmap should focus on the Chinese context. The solar market is a global market with China as one of the major players on the manufacturing side. Thus the roadmap should look into the  international market development expectations. Also the technology development is international and international development trends are therefore important frameworks for the Chinese roadmap. But the Chinese roadmap must address the challenges and possibilities for solar in the Chinese energy system, and also address the short term an long term possibilities and challenges for the solar manufactures.

The Chinese ambitions on deployment of solar installations are very ambitious, especially on the PV installations. This month NEA announced a target of 10 GW of installed capacity for 2013, about 10 times the installation in 2012. For solar thermal, especially large scale systems, the potential might not have be fully understod yet. For both technologies this roadmap will be very important to clarify both the short term and long term challenges and possibilities and also to look into the different policy measures suitable for ensuring the deployment.

The Chinese RE industry is wisely considered as one of the strategic emerging industries in China, and the Chinese solar PV Industry has certainly shown its ability to move quickly. But today the PV industry is in trouble. Production capacity is much higher than the current market demand, and it is difficult to quickly adjust this capacity downwards again. This partly explains the urgent need to stimulate the national market, but even the 10 GW goal might not solve the problem for the PV-industry. At the same time the technology breakthrough of new systems might be just around the corner, which again will challenge the Chinese manufactures. Will they be able to become front runners in this development or will they be stuck with the old technology solutions? I think this roadmap will be particular important for the solar industry as a basis for understanding both the national and international market and as a tool for understanding the emerging technologies which are necessary to implement in the future in order to survive and grow. I hope the team will use the working process to frequent consult with the industry, both to get inspiration and input but also to provide and discuss the result with this very important stakeholder group.

Should the roadmap be consistent with the current national energy plans? Not necessarily! Road maps should point to possibilities and expand the knowledge of these technologies. Roadmaps are in my opinion front runners for energy plans. Then of course the energy plans might have other considerations which will deviate from the roadmaps and that is actually no problem to have these different perspectives. So I encourage you to be bold regarding potentials and possibilities including ambitious long time goals but also to be realistic regarding the challenges and needs for implementing measures.

I am very happy to see that the working team include the best Chinese solar experts. This is very promising for the quality and success of the roadmap. I am of course also happy that it has been possible to include the Danish experts in the work contributing with experiences from Europe and from the important work in the IEA technology groups.

I wish you good luck with this important and exciting study. I am looking forward to follow the work and to see the first roadmap by the end of this year”.

 

The biggest obstacle to wind power development in China

Curtailed wind power gives record loss for wind power producers in 2012. Recent estimates reveals that 20 TWh or between 20 and 30 percent of the total Chinese wind power production was curtailed in 2012, according to Qin Haiyan, secretary general of the Chinese Wind Energy Association as cited in Windpower Monthly. The curtailed electricity has the value of CNY 10 billion, and the producers have not been compensated for the loss. The curtailed electricity could lower the local and global pollution and for the society as a whole it would be cheaper to curtail the coal fired power plants instead of the wind farms. To put it simple: Curtailed wind power = more pollution + more costs + less incentives for new wind power.Jilin_wind_farm

The large amount of curtailed wind power is in my opinion the biggest obstacle for the Chinese government’s ambitious plan for wind power deployment. It is difficult for wind power developers to justify investments in new wind farms if you know that up to 40% of the annual production will not be sold. And if you are forced to establish new wind farms due to quota system or similar, you will tend to invest in cheap wind turbines with low efficiency, since high efficiency will be punished by even more curtailment.

So it is absolutely necessary to improve the situation for the wind farms quickly in order to get the benefits from wind power and encourage more investments.

Then what should be done? Well in principle the solution is straight forward: The electricity system must be more flexible and regard wind power (and solar PV) as an integrated part of the system – not as an add-on to the thermal system. Today the thermal power plants have no or few  economic incentives for being flexible, since the income is almost solely depending on sale of electricity. Also the dispatch centres should have better possibilities and incentives for a more dynamic use of interconnectors to neighboring areas. When the economic incentives are in place the technical obstacles would soon disappear – all experiences from e.g. Europe show this.

In practice it might not be as simple. It is alway difficult to change the division of benefits and costs between different stakeholders and the thermal power plants would potential have difficulties in recovering investments if they have to cut down on the number of hour they can produce during the year. But if the Chinese government want to fulfill it’s ambitions on renewable energy, a solution must be found quickly. My guess is, that this issue is on top of the agenda for the NEA this year.

PS: The picture is from a large wind farm in the North West of Jilin, one of the provinces with most curtailment.

 

China 2012: Slowing down on RE deployment

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

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

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.