Figure 53. VRE curtailment by region, 2035, SDS-Inflex and SDS-Full flex

VRE curtailment rate (%)

30

25

SDS-Inflex

20

15

10

SDS-Full flex

5

0

The implementation of a portfolio of innovative power system flexibility measures significantly reduces VRE curtailment at both regional and national levels.

Summary

China’s goal of progressing from fair to economic dispatch will result in significantly lower power system operational costs and improved ability to integrate wind and solar power. China’s ongoing market reforms, including the introduction of economic dispatch, make good financial sense and will strongly benefit the environment. Detailed power sector modelling under the NPS compared two different ways to dispatch the system: first, using a fair dispatch approach that allocates guaranteed full-load hours to conventional generation, fixed at the level of 2017; and second, using economic dispatch, i.e. dispatching plants according to lowest operating cost while still preserving a modest generation allocation for natural gas generators.

Maintining the current fair dispatch system would lead to major inefficiencies in the capacity mix under the NPS in 2035, including very high levels of curtailment (33% combined for wind and solar PV at a national level). Improving the dispatch of the system brings operational cost savings of approximately 11% or USD 45 billion per year in the year 2035. Furthermore, curtailment falls to 5% at a national level and power sector CO2 emissions fall by 15% (650 million tonnes per year). These results clearly demonstrate the importance of introducing economic dispatch in the system.

The swift implementation of spot markets in China is a crucial tool for achieving this. Conversely, failure to introduce economic dispatch or other measures to reduce full-load hours allocated to fossil fuel power generators would result in unacceptably high levels of VRE curtailment.

Broader regional co-ordination and greater transmission interconnectivity will yield substantial economic benefits. Modelling results show the significant economic benefits of regional co-ordination and power trading in the Chinese power system. Again, two cases were compared. First, a case where utilisation of interregional transmission lines is fixed at 2017 levels. Second, a case where the flows are fully optimised. Assuming a fully optimised use of transmission lines, including those planned to be built by 2022, total operational costs are reduced by an additional 3% (USD 9 billion annually) compared to the case that only uses economic dispatch. Curtailment levels fall further from 5% to 3% at a national level. This

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