What China’sClimate Commitment Means for Its Electricity Sector
Last week, the United States and Chinaannouncedanhistoric agreement on climate. China has committed to generating 20percent of its energy from non-fossil fuel electricity, including nuclear,hydro, solar, biomass, and wind, by 2030. Much commentary has explored whetherChina’s commitment is ambitious enough, but few if any of these reactions havefocused on how China might actually achieve its targets.
First, the Chinese government should be praised for setting its target of 20percent non-fossil energy by 2030. It is notable that the United States lacksany similar national-scale commitment. The recently announced 20 percent targetis on top of China’sexisting targetof15 percent renewable energy generation by 2020, as well as the nation’sindividual capacity targets for solar (50 gigawatts), wind (200 gigawatts),biomass (30 gigawatts), and hydropower (300 gigawatts). Though it may seem the2030 target is not ambitious enough given China’s current activities, it isnevertheless important to think about what it will require to meet this targeton the ground.
The scale of China’s commitment is impressive. TheWhite House estimatesthat to produce 20 percent of itsenergy from non-fossil sources, China will have to install 1,000 gigawatts ofnew non-fossil capacity by 2030. That’s a United States' worth of generationcapacity. It’s the equivalent of installing a 7.5-megawatt wind turbine (the largest land turbine in the world) every hour from nowthrough 2030, or the equivalent of installing one average-sized nuclear plantevery six days from now until 2030. That kind of speed and scale represents anincredible undertaking.
The good news, though, is that China installed nearly 62 gigawatts ofnon-fossil capacity in 2013, which means that if the nation can nudge itsnon-fossil deployment rate up by just 10 percent and then maintain that rateover the next fifteen years, China can handily meet its newly announced target.So, while the speed and scale are undoubtedly impressive, it is certainlywithin China’s reach to deploy the generation capacity required for its 2030commitment.
More gridflexibility is needed
Generation capacityis not necessarily enough for China to meet its 20 percent non-fossil energytarget. The grid must be ready to accommodate and deliver the energy producedby all this new non-fossil capacity. Hydro can play a balancing role, butquestions remain about how well nuclear and renewable generation can playtogether. All of these changes highlight the need for more grid flexibility.But China’s grid, which is heavily dependent on coal power (62 percentofinstalled capacity and 74 percent of generation in 2013), is relativelyinflexible and will need modifications to integrate higher shares of non-fossilgeneration sources (indeed, roughly 21 percent of installed wind capacity wasunconnected in 2012).
There are many ways to augment grid flexibility, including upgrading systemoperations, expanding transmission capacity and widening balancing areas,integrating demand response, deploying energy storage and ramping the existingfossil fleet. These practices are commonly used to match fluctuations ingeneration with fluctuations in demand in regions with higher shares ofrenewables. But building this kind of flexibility into China’s grid willrequire significant investment.
For example, China may require a fundamental shift in how it operates itselectric grid. “Contract dispatching” is the name of the game in China, whichmeans grid operators guarantee that specific power plants will run for a fixednumber of hours per year, earning a fixed rate that covers the plants’ costsplus a return. As non-fossil generation grows to provide a much larger portionof China’s generation mix, fewer contract hours will be available to existingfossil resources, even against a backdrop of enormous economic growth.
The current contractstructure is focused on keeping existing plants profitable (by guaranteeingthem hours) rather than minimizing system costs. Several important proposalshave been put forward in China to turn this system operations paradigm on itshead -- making zero-carbon generation the core and using dispatchable fossilresources to fill in around them while ensuring that old plants are made whole.Steps like these will be crucial complements to China’s overall targets if thenation is to rely on higher shares of non-fossil generation.
Some have claimed that China’s commitment to non-fossil resources is notambitious enough. Yet China will need to build an amount of non-fossilgeneration in the next fifteen years that is equivalent to all of its current generationcapacity built over the last century. What’s more, integrating this newcapacity will require substantial changes to the way China manages its grid, aswell as the addition of new resources that can help manage the variability ofnon-fossil sources.
This commitmentsheds light on the need for flexibility on China’s grid, which -- if takenseriously -- can set the stage for much deeper decarbonization beyond itscommitment to peak by 2030.