A follow-up case study on ‘Resolving near-term power shortages in China from an economic perspective’ , CREA, WaterRock, 2023

Between 2007 and 2015, Inner Mongolia began building large-scale wind energy bases intensively and now has more than 6 terawatts (TW) of exploitable capacity in wind and solar that is relatively close to load centres in North, Central and East China, making it well positioned to build large-scale renewable energy bases for both local consumption and export to other provinces in China.

This case study on the large-scale clean energy bases in Inner Mongolia by CREA and WaterRock Energy Economics is a follow-up to last year’s report, ‘Resolving near-term power shortages in China from an economic perspective‘, which reviewed the reasons and solutions to near-term power shortages in China, including the tariff-setting mechanism and associated dispatch protocol; and maximising the inter-provincial transmission infrastructure through regulatory and policy changes; respectively.

In the current case study, CREA and WaterRock analysis finds that renewable exports from large-scale clean energy bases in Inner Mongolia to the load centres are more cost competitive than exports from neighbouring inland provinces or using local resources in the load centres and can help to better utilise existing infrastructure and reduce carbon emissions.

Yet, those projects faced high curtailment rates in the first years of operation, revealing that investment in large-scale clean energy projects in inland provinces must link with the development of export transmission infrastructures for exporting to load centres. 

China’s focus should now be to incentivise investment in a portfolio of highly flexible capacity and solutions, including battery energy storage solutions (BESS), pumped hydro storage, open cycle gas units, and concentrated solar plants and demand response solutions, in both sending and receiving provinces.