Integration of Variable Renewables in the Energy System of the EU and China: Policy Considerations: Joint Statement Report Series, #2020
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About this ebook
This report was prepared by
Gareth Davies and Christian Romig, John McShane and John Perkins, AFRY Management Consulting and
ZHAO Yongqiang, LIU Jian and HAN Xue, Energy Research Institute of National Reform and Development Commission
LEGAL DISCLAIMER
The information and views set out in this report are those of the author(s) and do not necessarily reflect the official opinion of the European Union, or ECECP. Neither the European Union nor ECECP can guarantee the accuracy of the data included in this study. Neither the European Union, ECECP nor any person acting on their behalf may be held responsible for the use, which may be made of the information contained therein.
© 2020 European Union. All rights reserved.
English editing: Helen Farrell, Chinese editing: CHI Jieqiao
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Integration of Variable Renewables in the Energy System of the EU and China - EU-China Energy Cooperation Platform Project
Table of Contents
FOREWORD
FOREWORD
EXECUTIVE SUMMARY
1. INTRODUCTION
1.1 Overview of report
1.2 Conventions
2. FEATURES OF THE 2030 ELECTRICITY SYSTEM
2.1 European Union
2.2 China
3. CHALLENGES TO DECARBONISING THE 2030 ELECTRICITY SYSTEM
3.1 European Union
3.2 China
4. SOLUTIONS TO OVERCOMING THESE CHALLENGES
4.1 Renewable incentives
4.2 Dealing with system operation challenges
4.3 Engaging the demand side
4.4 Incentivising efficient investment
5. SUGGESTIONS FOR CHINA
5.1 Renewable support schemes
5.2 Electricity market design
6. SUGGESTIONS FOR THE EUROPE-CHINA ENERGY COLLABORATION PLATFORM
This report was prepared by
Gareth Davies and Christian Romig, John McShane and John Perkins, AFRY Management Consulting
and
ZHAO Yongqiang, LIU Jian and HAN Xue, Energy Research Institute of National Reform and Development Commission
The report benefited from extensive comments made by Professor Jean Michel Glachant, Director of the Florence School of Regulation.
EU-China Energy Cooperation Platform (ECECP)
Website: http://www.ececp.eu
E-mail: info@ececp.eu
EU-China Energy Cooperation Platform was launched on 15 May 2019, to support the implementation of activities announced in the Joint Statement on the Implementation of EU-China Energy Cooperation
. The overall objective of ECECP is to enhance EU-China cooperation on energy. In line with the EU’s Green Deal, Energy Union, the Clean Energy for All European initiative, the Paris Agreement on Climate Change and the EU’s Global Strategy, this enhanced cooperation will help increase mutual trust and understanding between EU and China and contribute to a global transition towards clean energy on the basis of a common vision of a sustainable, reliable and secure energy system. ECECP is implemented by a consortium led by ICF, jointly with Energy Research Institute of National Development and Reform Commission and China Energy Conservation and Environment Protection Consulting; policy steering is by the EU (DG ENER) and the China National Energy Administration.
LEGAL DISCLAIMER
The information and views set out in this report are those of the author(s) and do not necessarily reflect the official opinion of the European Union, the China National Energy Administration or ECECP. Neither the European Union nor China National Energy Administration nor ECECP can guarantee the accuracy of the data included in this study. Neither the European Union, China National Energy Administration, ECECP nor any person acting on their behalf may be held responsible for the use, which may be made of the information contained therein. More information on the ECECP is available on the Internet (http://www.ececp.eu)
© 2020 European Union. All rights reserved.
English editing: Helen Farrell, Chinese editing: CHI Jieqiao
FOREWORD
CHINA AND THE EUROPEAN Union have many things in common, many challenges to discuss together, and many good practices to share. This is particularly the case in the power sector; China leads the world in its investments into renewables generation capacity, and as the leading manufacturer of PV panels. The EU has also made enormous strides in achieving a rapid growth in installed renewables capacity, and as the main producer of wind turbines, particularly offshore.
The two reports presented here look at the global picture from two angles: the use of markets to give new impetus to the power sector while guaranteeing security of supply; and the integration of an increasing amount of renewables into the power sector and the markets.
The formation and implementation of markets in the power sector is a challenge, and a complex task in giant territories like China, with about 30 different provinces, and the EU, with its 27 member states. Inevitably markets operate at different levels (nationally and locally).
The power sector, by its very nature, also requires a ‘sequence of successive markets’ (from months ahead, to day-ahead, intra-day and spot markets). Consequently, extensive territories end up with a sequence of successive markets that operates on two levels. Decisions at each level must, in one way or another, be linked with the physical management of power flows through the grids and the system.
This is what is known as the ‘market design’ issue. How does China approach it, and what is its rationale? How and why does it differ from the EU? Do China and the EU have the same goals while using the same tools, or the same tools when addressing the same goals?
The same questions arise when power systems and markets are required to absorb an increasing proportion of renewables. Solar and wind generation require very high fixed-cost investments upfront and their output fluctuates. How are the existing market sequences responding to renewables in China and the EU? How should market outcomes connect with the new needs of the power system in the face