China has pledged to peak carbon emissions by 2030 and achieve carbon neutrality by 2060, which has set a long-term goal for reducing emissions. The total amount and intensity of carbon emissions are important constraints on structural changes in the power sector. The pathway to efficiently drive the transition in the energy system is the next key issue. Climate research suggests that the power sector is the industry with the most available options for emissions reduction technologies, therefore it should be the first to achieve decarbonisation and eventually (near) zero emissions. 

In this report, we analyse a series of power outage events in 2020 and 2021 with a focus on system capacity adequacy followed by a discussion on how a novel power system could be established. We also evaluate the system adequacy of East China (during summer) and Central China (during winter) based on available generation resources and projected maximum demand.

The contents of this report include:

• A description and explanation of the power outages in Texas, United States; Hunan and Jiangxi, China; and Western Europe. We also share our opinions on the roles of various power sources and the interpretation of system adequacy.
• A summary of China’s current dispatching paradigm of the power system, focusing on the institutional obstacles that negatively impact the improvement of the power system efficiency. Based on such observations, this report also provides insights for a novel power system.
• Case study: East China, Summer 2021. This report evaluates the system capacity adequacy of each province in East China and the overall region, plus the contribution of various power sources and possible extreme scenarios given fluctuating energy demand.
• Case study: Central China, Winter 2021. This report evaluates the level of system adequacy in Central China (using the same methodology that was applied to assess East China), and discusses the approach to reduce the need for redundant units through more flexible operations, even under extreme climate conditions.
• Conclusion and suggestions. Based on the case studies and analyses, this report summarises the key challenges for China to meet its long-term goal to achieve zero emissions in the power sector, and proposes policy recommendations.

This report concludes that:

• The East China case study shows that if the scope of balancing expands from the provincial level to the regional level, it is possible to avoid the need to expand capacity of more than 30GW, and save about 90 billion Yuan, or 13.5 billion USD, in infrastructure investment. With balancing on a larger geographic scale than is used at present, there will be no problem in system adequacy over the next 5 years. Even under various adverse conditions (demand beyond projection, outage of inter-regional transmissions, decreased solar output), the system would still remain robust. 
• The Central China case study shows that power generation resources in all provinces are sufficient. Most of the new power demand can be smoothed through flexible cross-province operation within the regional grid. As the energy demand in some of the provinces increasingly peaks in the winter,  cross-provincial balancing will be complementary across provinces and could reduce 11% of projected total power installations.
• Adding new fossil energy units goes against the roadmap towards meeting climate targets and economic rationality. New coal power plants would mean a negative shift in the carbon emissions trajectory of the power sector in upcoming years, or would require carbon capture, utilisation and storage (CCUS), whose prospects are still highly uncertain. The duration of surging electricity demand tends to be on a short-term basis, which is not suitable for coal-fired power plants because coal plants usually need an operational period of more than  4,000 hours per year to be economical.
• Novel power systems should be highly flexible and intelligent. Annual monitoring and assessment of adequacy and transparency should be required. To ensure adequacy in an economical manner, it is necessary to make investments to strengthen power grids that are below 500kV, and also lay a physical infrastructure foundation to support a regional cross-province balancing as well as the unified power market.

Report English briefing

报告中文全文