A new report issued by the Regulatory Assistance Project, Energy Efficiency as a Resource for the Power Sector in China (将能效作为中国电力行业的一项资源), examines the potential use of energy efficiency as a power system resource in China. In several jurisdictions around the world, electricity utilities employ end-use energy efficiency as a cost-effective alternative to investing in supply-side resources, such as building power plants and expanding the electricity grid.

The report describes three comprehensive policy, regulatory, and organizational systems that enable energy efficiency to be used as a power system resource. These methods for integrating energy efficiency into power system resource planning are readily available and already in active use in many jurisdictions around the world, including the Chinese province of Guangdong. Case studies of Guangdong and other jurisdictions demonstrate that energy and capacity savings can be successfully acquired at a lower cost than conventional electricity generation, and with all the additional benefits that energy efficiency provides.

Tapping into energy efficiency resources is particularly important in China where air pollution from coal-fired power plants is a large and growing problem. Energy efficiency can meet a portion of China’s needs for energy services while also contributing to reducing air pollution and could make an important contribution to China’s current Clean Air Action Plan.

China has a long history of establishing government policies that require extensive energy efficiency programs, particularly in the industrial sector. More recently, the central government has established a rule that requires grid companies to implement energy efficiency.

“Grid companies are the key to using energy efficiency as a power system resource in China,” said Dr. David Crossley, author of the report. “In common with many electricity utilities in other countries, Chinese grid companies may be initially reluctant to consider energy efficiency as a resource; they may have questions about whether energy efficiency is as predictable or as ‘firm’ as supply-side resources. The practical experience with utility energy efficiency programs described in this paper should alleviate these concerns.”

What is needed now is for the Chinese central government to strengthen policy and regulatory mechanisms to both expand the energy efficiency programs delivered by grid companies and to enable energy and capacity savings achieved by all energy efficiency programs implemented in China to be used as power system resources. This will reduce the number of new power stations and augmentations of grid infrastructure that must be built in the future.