Meeting China’s ambitious new climate and energy goals will require dramatic change within the power sector, transitioning from a coal-dominated generation mix to a more carefully targeted mix of non-fossil resources. This shift will require continued policy reform focused on advancing environmental objectives while improving operational and investment efficiency.

Northwest China, with its abundant renewable energy resource potential, has unique opportunities to advance the transition. However, the region currently has significant overcapacity in coal generation and is the pilot region for a new national coal asset restructuring effort. Meanwhile, curtailment of wind, solar and hydro generation has been high in the region in recent years, although curtailment levels have decreased.

This report recommends policy and regulatory strategies to support the power sector transition in Northwest China and take advantage of cost-effective opportunities to export renewable energy to other regions. We focus on three main areas: (1) taking a regional approach to grid operations to improve efficiency; (2) coordinating coal retirement initiatives across the central and regional levels; and (3) ensuring that planning processes work to identify least-cost options for meeting decarbonization and other policy goals. The 10 strategies we describe represent practical next steps that draw on international experience and the reform experience in other parts of China.