
- •Abstract
- •Highlights
- •Executive summary
- •Actions to boost flexibility and investment
- •Modelling analyses
- •Spot markets and trade
- •Advanced power system flexibility
- •International implications
- •Findings and recommendations
- •Report context and objectives
- •Drivers of change in power systems
- •Rapid growth of wind and solar PV
- •Power system flexibility
- •Phases of VRE integration
- •Priority areas for system transformation
- •Modelling approach
- •Spot markets and regional trade
- •Advanced power system flexibility
- •Investment certainty
- •Renewable energy policy
- •Market design and planning
- •Wholesale market design
- •Retail market design
- •Upgraded planning frameworks
- •International implications
- •Technical analysis
- •Introduction
- •Context and status of power system transformation in China
- •Background
- •Economically shifting gears
- •Ecological civilisation
- •Power system transformation
- •Brief introduction to China’s power system
- •Current status of power system in China
- •General perspective
- •How the power system works in China
- •Historical evolution
- •Power sector reform in 2015
- •Challenges in China’s power sector
- •Planning
- •Interprovincial and interregional trading
- •Dispatching order
- •Benchmark pricing system
- •Renewable development and integration
- •Emerging trends in system transformation in China
- •Introducing flexible market operation
- •Establishing spot markets
- •Incremental distribution grid pilots
- •Unlocking the retail side
- •Power plant flexibility pilots
- •Realising optimised planning
- •Five-year plan
- •Long-term strategy
- •Technological innovation and electrification
- •Distributed energy
- •Multi-energy projects, microgrids and “Internet+” smart energy
- •Digitalisation
- •Demand-side management/demand-side response
- •Electricity storage
- •EV development
- •Clean winter heating programme
- •Summary
- •References
- •Power system transformation and flexibility
- •Three global trends in power systems
- •Low-cost wind power and solar photovoltaics
- •Digitalisation
- •Rise of DER
- •Distributed solar PV
- •Electricity-based clean heating
- •Implications for power systems
- •Flexibility as the core concept of power system transformation
- •Properties of VRE generators
- •Phases of system integration
- •Different timescales of system flexibility
- •Layers of system flexibility
- •Redefining the role of system resources
- •Differentiating energy volume and energy option contributions
- •Evolving grids
- •From passive demand to load shaping
- •Implications for centralised system resources
- •Operational regime shifts for thermal assets
- •Matching VRE to system requirements
- •Increasing need for advanced grid solutions
- •Deploying advanced grid solutions
- •Multiple deployment opportunities for large-scale storage
- •Optimising the use of PSH
- •Embracing the versatility of grid-scale batteries
- •Synthetic fuels and other long-term storage options
- •Large-scale load shaping
- •Industrial demand response
- •Efficient industry electrification
- •Implications for DER
- •System benefits of energy efficiency
- •Mobilising the load through EVs
- •Targeting energy efficiency for system flexibility
- •Engaging distributed battery storage
- •Distributed generation for system services
- •Aggregation for load shaping
- •References
- •Policy, market and regulatory frameworks for power system transformation
- •Basic principles to unlock flexibility
- •Wholesale market design
- •General setup
- •Short-term markets (minutes to hours)
- •Medium-term markets (month to three years)
- •Long-term investment market (three years and beyond)
- •Economic dispatch and rapid trading
- •Cross-regional trade of electricity
- •Benefits of regional power system integration
- •Centralised versus decentralised models of integration
- •Market integration in the European Union
- •Market organisation
- •Attracting investment in low-carbon generation capacity
- •SV as a key concept for renewable and low-carbon energy development
- •System-friendly VRE deployment
- •German market premium system
- •Mexican clean energy and capacity auctions
- •Pricing of externalities
- •Impact of CO2 pricing on daily and long-term operations in the power market
- •Policy packages and interactions
- •Electricity sector design
- •Retail markets and distributed energy resources
- •Retail pricing reform
- •Degrees of granularity for retail tariffs
- •Compensating DER
- •Implications for general policy design
- •Revisiting roles and responsibilities
- •The DSO-TSO interface
- •Aggregators
- •Role of ISOs
- •Centralised and decentralised platforms for DER engagement
- •Elements of structural reform
- •Policy principles for DER
- •Upgraded planning frameworks
- •Integrated planning incorporating demand-side resources
- •Integrated generation and network planning
- •Integrated planning between the power sector and other sectors
- •Interregional planning
- •Including system flexibility assessments in long-term planning
- •Planning for distribution grids
- •Improved screening/study techniques
- •Including local flexibility requirements in planning techniques
- •Policy principles for planning and infrastructure
- •Transition mechanisms to facilitate system reforms
- •Mexico’s legacy contracts for the regulated supplier
- •Transition from the public service regime
- •Transition from the private-party regime (self-supply)
- •Treatment of “stranded costs” in the United States
- •References
- •Power system transformation pathways for China to 2035
- •General trends in China’s power system evolution
- •Achieving a “Beautiful China”
- •Key variables for system transformation
- •Different power system pathways
- •Two main scenarios for 2035
- •Power sector modelling cases analysed for the NPS
- •Power sector modelling cases analysed for the SDS
- •Description of power system model used for analysis
- •Power sector modelling results
- •Comparing basic features of the WEO 2018 NPS and SDS results
- •NPS modelling cases
- •High-level summary of results
- •Value of moving from fair dispatch to economic dispatch
- •Value of unlocking interregional trading
- •A closer look at VRE-rich regions
- •SDS modelling cases
- •High-level summary of the results
- •Understanding an SDS power system without advanced flexibility options: SDS-Inflex
- •Assessing individual flexibility options
- •Understanding the value of DSR deployment: SDS-DSR
- •Understanding the value of electricity storage: SDS-Storage
- •Understanding the value of smart EV charging: SDS-EV
- •Assessing portfolios of flexibility options
- •Understanding the value of a portfolio of DSR and EVs: SDS-DSR+EV
- •Understanding the value of a portfolio of storage and EVs: SDS-Storage+EV
- •Understanding the value of a combined portfolio of smart EV charging, DSR and storage: SDS-Full flex
- •Summary
- •References
- •Summary and conclusions
- •Power system transformation in China
- •China has already embarked on its own pathway to power system optimisation.
- •Integrating variable renewable energy and an orderly reduction of coal power will be the primary challenges for successful power system optimisation.
- •Power system flexibility will become the most important attribute of a transformed power system.
- •Different layers of the power system need to be addressed in order to achieve system transformation successfully.
- •The alignment and integration of different policies and measures in the power sector and related sectors are pivotal to long-term success.
- •Optimising the dispatch of power plants is a fundamental prerequisite for reducing power generation costs and preserving VRE investability.
- •Creating short-term markets and robust short-term price signals can greatly facilitate power system transformation and reduce system-wide energy prices.
- •The optimised use of existing and soon-to-be-built transmission lines can substantially reduce renewable energy curtailment and integrate additional wind and solar capacity.
- •Optimising power system operation is bound to trigger the market exit of inefficient coal generators; this process is likely to need active management.
- •Innovative options to further accelerate progress towards a “Beautiful China”
- •Optimised use of demand-shaping techniques is critical to unlock very high shares of renewable energy cost-effectively.
- •Electric mobility has great potential for integrating renewable energy, but only if charging patterns are optimised.
- •Applying digital technologies to the distribution grid and at the customer level can unlock additional flexibility and is an opportunity for economic development.
- •Additional considerations for markets, policies, regulation and planning
- •Advanced renewable energy policies can minimise integration challenges.
- •Advanced design of wholesale markets, including markets for system services, is an important tool to accelerate power system transformation.
- •Changes to electricity tariffs could help optimise the deployment and use of distributed energy resources (DER).
- •Integrated long-term planning that includes demand shaping and advanced options for energy storage is a crucial foundation for a successful transformation of the power system.
- •International implications
- •Accelerated progress on power sector optimisation could bring substantial benefits for China and the world.
- •References
- •Annexes
- •Annex A. Spatial disaggregation of national demand and supply
- •Modelling regions and interconnections
- •Defining modelling regions and regional interconnections
- •Creating regional electricity demand profiles
- •Generating hourly load profiles for each region
- •Allocating generation capacity between regions
- •Method used for calculating CAPEX savings
- •References
- •Acronyms
- •Acknowledgements, contributors and credits
- •Table of contents
- •List of figures
- •List of boxes
- •List of tables
China Power System Transformation |
Table of contents |
Table of contents |
|
China Power System Transformation Assessing the benefit of optimised operations and advanced flexibility |
|
options ........................................................................................................................................................... |
1 |
Abstract .................................................................................................................................................... |
1 |
Highlights.................................................................................................................................................. |
2 |
Executive summary .................................................................................................................................... |
3 |
Findings and recommendations................................................................................................................... |
6 |
Report context and objectives ................................................................................................................................... |
6 |
Technical analysis .......................................................................................................................................... |
23 |
Introduction............................................................................................................................................. |
23 |
Context and status of power system transformation in China....................................................................... |
26 |
Background............................................................................................................................................................. |
26 |
Brief introduction to China’s power system.............................................................................................................. |
28 |
Emerging trends in system transformation in China................................................................................................. |
37 |
Summary ................................................................................................................................................................ |
48 |
References .............................................................................................................................................................. |
49 |
Power system transformation and flexibility .............................................................................................. |
54 |
Three global trends in power systems ...................................................................................................................... |
54 |
Flexibility as the core concept of power system transformation ............................................................................... |
60 |
Implications for centralised system resources .......................................................................................................... |
68 |
Implications for DER................................................................................................................................................ |
79 |
References .............................................................................................................................................................. |
87 |
Policy, market and regulatory frameworks for power system transformation................................................ |
90 |
Basic principles to unlock flexibility.......................................................................................................................... |
90 |
Wholesale market design ........................................................................................................................................ |
91 |
Retail markets and distributed energy resources.................................................................................................... |
110 |
Upgraded planning frameworks............................................................................................................................. |
118 |
Transition mechanisms to facilitate system reforms .............................................................................................. |
126 |
References ............................................................................................................................................................ |
130 |
Power system transformation pathways for China to 2035.......................................................................... |
134 |
General trends in China’s power system evolution ................................................................................................. |
134 |
Achieving a “Beautiful China” ................................................................................................................................ |
135 |
Key variables for system transformation................................................................................................................ |
136 |
Different power system pathways .......................................................................................................................... |
137 |
Two main scenarios for 2035.................................................................................................................................. |
138 |
Power sector modelling results .............................................................................................................................. |
144 |
Comparing basic features of the WEO 2018 NPS and SDS results........................................................................... |
144 |
NPS modelling cases ............................................................................................................................................. |
145 |
SDS modelling cases ............................................................................................................................................. |
153 |
References ............................................................................................................................................................ |
170 |
Summary and conclusions........................................................................................................................ |
171 |
Power system transformation in China ................................................................................................................... |
171 |
Options to facilitate implementation of the Document 9 reforms ........................................................................... |
173 |
Innovative options to further accelerate progress towards a “Beautiful China” ........................................................ |
175 |
Additional considerations for markets, policies, regulation and planning................................................................. |
177 |
International implications ...................................................................................................................................... |
179 |
References ............................................................................................................................................................ |
180 |
Annexes ................................................................................................................................................ |
181 |
Annex A Spatial disaggregation of national demand and supply............................................................................. |
181 |
Generating hourly load profiles for each region...................................................................................................... |
184 |
Allocating generation capacity between regions.................................................................................................... |
185 |
Method used for calculating CAPEX savings........................................................................................................... |
187 |
References ............................................................................................................................................................ |
187 |
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IEA. All rights reserved
China Power System Transformation |
Table of contents |
||
Acronyms |
.............................................................................................................................................. |
|
189 |
Acknowledgements, contributors and credits ........................................................................................... |
|
192 |
|
Table of contents................................................................................................................................................... |
|
194 |
|
List of figures |
|
|
|
Figure 1. |
Illustration of an interconnected energy system enabled by digitalisation .............................................. |
|
7 |
Figure 2. |
Overview of different power system flexibility resources........................................................................ |
|
9 |
Figure 3. |
Three main pillars of system transformation ........................................................................................ |
|
11 |
Figure 4. |
Capacity and generation mix for China in 2035, IEA WEO NPS and SDS................................................ |
|
13 |
Figure 5. |
Operational costs, inflexible and flexible cases, NPS, 2035 ................................................................... |
|
16 |
Figure 6. |
Benefits and costs of different advanced power system flexibility options, SDS, 2035 .......................... |
|
17 |
Figure 7. |
Average auction price by project commissioning date for utility-scale wind and solar PV...................... |
|
55 |
Figure 8. |
Share of VRE in global capacity growth and power generation growth, 2018–23 .................................. |
|
55 |
Figure 9. |
Illustration of an interconnected energy system enabled by digitalisation ............................................ |
|
57 |
Figure 10. |
Global heat pump sales by technology, 2012–17 (left) and regional shares in 2017 (right)...................... |
|
59 |
Figure 11. |
Impact of EVs on capacity credit of solar PV in Thailand, 2036.............................................................. |
|
60 |
Figure 12. |
Overview of VRE system integration phases for different countries and selected provinces, 2017......... |
62 |
|
Figure 13. |
Different layers of system flexibility..................................................................................................... |
|
65 |
Figure 14. |
Impact of decentralisation and digitalisation on local power grids ........................................................ |
|
67 |
Figure 15. |
Battery storage deployment by market region in the United States, 2017 ............................................. |
|
77 |
Figure 16. |
Technical impacts of rising deployment of distributed solar PV generation .......................................... |
|
85 |
Figure 17. |
Overview of different building blocks of electricity markets ................................................................. |
|
93 |
Figure 18. |
Monthly trading volumes on the German intraday market, 2012-16 ..................................................... |
|
95 |
Figure 19. |
Developing the EU network codes ....................................................................................................... |
|
98 |
Figure 20. |
Illustration of the LCOE and SV.......................................................................................................... |
|
104 |
Figure 21. |
Links between the VRE cost, the SV and competitiveness.................................................................. |
|
105 |
Figure 22. |
Options for retail pricing at different levels of granularity................................................................... |
|
112 |
Figure 23. |
Value components of local generation ................................................................................................ |
|
113 |
Figure 24. |
Power generation by ownership, Mexico prior to reform, 2014............................................................ |
|
127 |
Figure 25. |
Installed generation capacity under legacy contracts and share of demand, 2017-29.......................... |
|
129 |
Figure 26. |
Energy access, electricity consumption and generation capacity, China, 1990–2016 ........................... |
|
135 |
Figure 27. |
Capacity and generation of wind and solar PV.................................................................................... |
|
136 |
Figure 28. |
Capacity mix for China in 2035, NPS and SDS..................................................................................... |
|
144 |
Figure 29. |
Generation mix and curtailment rate in China, 2035, all NPS cases ..................................................... |
|
146 |
Figure 30. |
Annual power system operational costs by cost category, 2035, NPS cases......................................... |
|
147 |
Figure 31. |
CO2 emissions and air pollutants, 2035, NPS cases.............................................................................. |
|
147 |
Figure 32. |
Impact of moving to economic dispatch on coal power plant capacity factor, by region...................... |
|
148 |
Figure 33. |
National level load and generation mix of a typical week, fair and economic dispatch ........................ |
|
149 |
Figure 34. |
Impact of interregional trading and transmission expansion on coal-fired power plant utilisation, |
|
|
|
by region ........................................................................................................................................... |
|
150 |
Figure 35. |
Load and net import of energy by region, 2035, NPS cases ................................................................. |
|
151 |
Figure 36. |
Generation mix and VRE curtailment rate in the NWR......................................................................... |
|
153 |
Figure 37. |
Annual operational cost savings from different flexibility options, 2035, SDS ..................................... |
|
154 |
Figure 38. |
Annuitised net power system cost savings, relative to SDS-Inflex, all SDS cases................................. |
|
155 |
Figure 39. |
Annual CO2 emissions, 2035, SDS cases ............................................................................................. |
|
155 |
Figure 40. |
Generation patterns and the demand profiles during high stress periods with limited flexibility options, |
||
|
SDS-Inflex case.................................................................................................................................. |
|
156 |
Figure 41. |
Generation patterns and demand profiles during high-stress periods, SDS-DSR.................................. |
|
157 |
Figure 42. |
VRE curtailment in SDS-Inflex and SDS-Storage cases, by region....................................................... |
|
160 |
Figure 43. |
Net load during peak demand periods in the SDS-Storage and SDS-Inflex cases ................................ |
|
160 |
Figure 44. |
Demand reduction due to smart EV charging during periods of peak demand, SDS-EV case, 2035 ..... |
161 |
|
Figure 45. |
VRE curtailment in SDS-EV and SDS-Inflex cases, by region............................................................... |
|
162 |
Figure 46. |
Generation patterns and demand profiles during high stress periods in SDS-EV case ......................... |
|
162 |
Figure 47. |
Provision of upward ramping flexibility from different flexibility options before and after the |
|
|
|
introduction of EV smart charging ..................................................................................................... |
|
163 |
Figure 48. |
VRE curtailment rate in SDS cases with smart EV charging and DSR, by region .................................. |
|
165 |
Figure 49. |
VRE curtailment rate in SDS cases with EV smart charging and storage, by region ............................. |
|
166 |
Figure 50. |
Charging and discharging of storage alongside VRE generation during the period of minimum and peak |
||
|
net demand, with and without EV smart charging.............................................................................. |
|
166 |
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IEA. All rights reserved
China Power System Transformation Table of contents
Figure 51. |
Generation patterns and demand profiles during high-stress periods, SDS-Full flex case.................... |
167 |
Figure 52. |
Demand reduction due to portfolio of flexibility measures during peak demand, 2035, SDS-Full Flex |
|
case |
168 |
|
Figure 53. |
VRE curtailment by region, 2035, SDS-Inflex and SDS-Full flex........................................................... |
169 |
Figure 54. |
Modelling regions.............................................................................................................................. |
182 |
Figure 55. |
Wind and solar potential in China....................................................................................................... |
186 |
List of boxes
Box 1. |
Lessons learnt from Document 5 round of reform ................................................................................ |
32 |
Box 2. |
Energy conservation dispatch.............................................................................................................. |
35 |
Box 3. |
Multi-energy complementary project in Gui’an .................................................................................... |
43 |
Box 4. |
Microgrid project in Suzhou................................................................................................................. |
43 |
Box 5. |
“Internet+” project in Guangdong........................................................................................................ |
44 |
Box 6. |
Envision’s platform for the Internet of things ....................................................................................... |
44 |
Box 7. |
DSR trial in Jiangsu (14:00-14:30, 26 July 2016) .................................................................................... |
46 |
Box 8. |
EV subsidy in China.............................................................................................................................. |
48 |
Box 9. |
Improving flexibility parameters in legacy coal plants .......................................................................... |
69 |
Box 10. |
Flexible operation of solar PV .............................................................................................................. |
71 |
Box 11. |
DLR in the Snowy Region, Australia..................................................................................................... |
73 |
Box 12. |
Innovative use of existing PSH for integrating solar PV in Kyushu, Japan.............................................. |
75 |
Box 13. |
Reducing the cost of ancillary services in Australia – the Hornsdale battery.......................................... |
76 |
Box 14. |
V2G for frequency regulation............................................................................................................... |
81 |
Box 15. |
Battery storage for real-time balancing ............................................................................................... |
83 |
Box 16. |
Battery storage for balancing the distribution network ........................................................................ |
84 |
Box 17. |
Pooling industry and battery storage in virtual power plants ................................................................ |
86 |
Box 18. |
ETSs in China..................................................................................................................................... |
109 |
Box 19. |
The role of data exchange platforms in changing power systems ........................................................ |
115 |
Box 20. |
PacifiCorp’s Integrated Resource Plan ............................................................................................... |
119 |
Box 21. |
Co-ordinated transmission network planning in Europe ..................................................................... |
122 |
Box 22. |
Beyond 15% penetration: New technical DER interconnection screens for California.......................... |
124 |
Box 23. |
Planning for local flexibility requirements .......................................................................................... |
124 |
Box 24. |
Key findings in WEO related to China’s power sector and global electrification................................... |
138 |
Box 25. |
Boosting the flexibility of aluminium smelters in China ...................................................................... |
158 |
Box 26. |
Disaggregation of China’s electricity demand based on future regional development and |
|
|
environmental strategies ................................................................................................................... |
184 |
List of tables
Table 1. |
Selected key power sector indicators in China’s 13th Five-Year Plan..................................................... |
40 |
Table 2. |
DSR development in pilot cities ........................................................................................................... |
45 |
Table 3. |
Overview of differences between wind power and solar PV.................................................................. |
61 |
Table 4. |
Summary of impacts associated with Phases 1 to 4 of system integration ............................................ |
63 |
Table 5. |
Different timescales of power system flexibility ................................................................................... |
64 |
Table 6. |
Performance parameters per unit ........................................................................................................ |
70 |
Table 7. |
Qualitative description of energy storage services in the power system ............................................... |
74 |
Table 8. |
Additional planning activities to integrate DER .................................................................................. |
123 |
Table 9. |
Case settings for the NPS analysis ..................................................................................................... |
140 |
Table 10. |
Case settings for the SDS analysis...................................................................................................... |
143 |
Table 11. |
Generation capacity in China, NPS and SDS WEO scenarios............................................................... |
145 |
Table 12. |
VRE curtailment rate by region .......................................................................................................... |
152 |
Table 13. |
Division of eight regions .................................................................................................................... |
183 |
Table 14. |
Transmission capacity (MW): existing and future assumed capacity ................................................... |
183 |
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