Renewable energy integration in China is an urgent and complex problem, requiring solutions in planning, policy, market design, regulation, operations (dispatch), and resource flexibility. All of these have a role to play in increasing system flexibility to support higher penetrations of variable renewable energy. This paper reviews U.S. experience with increasing renewable energy integration and resource flexibility and identifies options that could be helpful for China.
In the U.S., a consensus is emerging that the existing power system can be made substantially more flexible at reasonably low cost. These low-cost solutions include wider balancing areas, changes in market designs and operating practices, incentives for existing conventional generators to operate more flexibly, and policies and pricing to promote demand-side flexibility. New investments in transmission, storage, and flexible gas-fired generation can also be helpful for integrating renewable energy but are typically less cost-effective in the near term. We expect the same is likely to be the case in China but recommend that policymakers determine where and how to best increase the flexibility of the country’s existing electricity system.
Improved dispatch and better short-term wholesale pricing mechanisms are among the reforms that can be highly beneficial in China. Indeed, these have been part of the Document #9 effort—although consensus on a sufficiently detailed path forward has yet to emerge. The paper also identifies specific questions to guide policymakers as they design China’s new electricity markets.
This paper is one in a series of papers by RAP and the Natural Resources Defense Council that looks at international experience for potential solutions and perspectives to inform China’s policymakers as they work toward meeting the country’s air quality and greenhouse gas reduction goals. Other papers address wholesale markets, power sector planning, and regulation and governance.
This paper is also available here in Chinese.