Liu Qi, Deputy Director of the National Energy Administration, stated at the launch meeting for research on wind power grid integration and market absorption held recently in Beijing that The National Energy Administration will conduct research over the next six months in 11 provinces (regions) concerning wind power development planning, market absorption, and transmission planning. Rigidly binding targets will be established, with emphasis on the proportion of non-hydro renewable energy in the electricity mix, to effectively address transmission and market absorption challenges for the 90 gigawatts of wind power capacity by 2015 and 150 gigawatts by 2020.
Since the revised Renewable Energy Law came into effect on 1 April, industry calls for supporting implementation rules have intensified. The National Energy Administration’s initiative to address wind power grid integration and market absorption is widely regarded as a robust measure to implement the new legislation.
Utilising Generation Quota Targets to Facilitate Grid Integration
At the aforementioned meeting, Liu Qi emphasised that when integrating renewable energy into the grid, it is essential to establish both an overall target for renewable electricity share and a specific target for non-hydro renewable electricity share. These targets will be allocated to grid companies based on the projected renewable electricity generation capacity outlined in their respective regional renewable energy development plans, alongside the technically feasible absorption capacity for renewable electricity within their service areas.
Previously, sources disclosed to media that the Renewable Energy Power Generation Quota Management Measures, aimed at advancing renewable energy generation targets, are currently being expedited. The measures will constrain grid enterprises through renewable energy generation quotas, considering actual generation volumes as the benchmark. Obligated parties will be required to ensure a fixed proportion or quantity of renewable energy within their total electricity supply.
Regarding this, Shi Lishan, Deputy Director-General of the New and Renewable Energy Department at the National Energy Administration, stated to China Energy News during the ‘First Quarter Energy Economic Operation Analysis Meeting’ held in late April that The newly revised Renewable Energy Law explicitly stipulates: ‘The competent energy authority of the State Council, in conjunction with the national electricity regulatory body and the financial department of the State Council, shall determine the proportion of renewable energy generation that must be achieved relative to total electricity generation within the planning period, in accordance with the national renewable energy development and utilisation plan. Specific measures shall be formulated for grid enterprises to prioritise the dispatch and full purchase of renewable energy generation.’
Ensuring the Full Guaranteed Purchase System is Truly Implemented
Regarding recent policy developments concerning the implementation of the new Renewable Energy Law, Wang Zhongying, Deputy Director of the Energy Research Institute at the National Development and Reform Commission, stated in an interview with China Energy News that The previous Renewable Energy Law stipulated that grid operators must ‘enter into grid connection agreements with renewable energy power generation enterprises that have obtained administrative permits or completed filing procedures in accordance with the law, purchase all electricity generated by renewable energy grid-connected projects within their coverage area, and provide grid access services for renewable energy generation.’ However, when local grids struggle to absorb additional renewable energy or reach saturation, full purchase becomes an empty promise that cannot be fulfilled.
‘Take wind power generation as an example. The current situation is that areas with favourable wind conditions have low electricity loads, and the local consumption capacity for wind power is approaching saturation. Meanwhile, regions with high electricity consumption and heavy loads often find the amount of wind power they receive insufficient to meet their needs. This contradiction is particularly acute,’ “Wang Zhongying pointed out that in Inner Mongolia Autonomous Region, currently the most favourable location for wind power development, wind power generation already accounts for 20% of the region’s total electricity load. If it were required to absorb this entirely locally, wind power development would inevitably stall.
The Inner Mongolia Power Grid Company operates as an independently accounted entity outside State Grid’s jurisdiction. Under this framework, adhering to the principle that ‘grid operators shall only accommodate renewable energy generation within their coverage areas’ has resulted in substantial wind power being unable to exit the grid. In extreme cases, wind farms face mandatory curtailment. Consequently, Wang Zhongying contends that alongside stipulating renewable energy consumption quotas for grid operators, policies should be introduced to encourage inter-provincial transmission of wind power from regions experiencing rapid wind power development, complementing local consumption. ‘The rapid expansion of wind power in Denmark and Germany within Europe has benefited from cross-border transmission capabilities between national grids, effectively resolving issues of cross-border transmission benefit distribution and grid regulation. Why can’t our domestic grids achieve interconnection for cross-provincial transmission?’ Wang Zhongying stated. To support renewable energy grid integration, the most urgent task is to implement necessary policy measures to establish a benefit distribution mechanism for ‘cross-provincial transmission’ that safeguards renewable energy grid integration.
In response, Liu Qi stated that one of the key priorities for the next phase of work is to scientifically determine the scope for absorbing renewable energy electricity. Regarding wind power absorption, it is essential to reasonably balance the principle of ‘absorbing electricity locally with expanding the scope to enhance absorption capacity’. Provincial government authorities must approve wind power projects within the framework of national unified planning, with consumption scope generally confined to the provincial grid. The national energy authority shall centrally organise the development of large-scale wind power bases, coordinating the consumption of electricity exceeding provincial grid capacity within regional grids.
Development Fund: Beneficial Yet Requiring Increased Allocation
The newly revised Renewable Energy Law has amended the original ‘special fund for renewable energy development established by the state treasury’ to ‘a renewable energy development fund established by the state treasury’. Wang Zhongying pointed out that when the electricity tariff surcharge levied to support renewable energy generation projects was previously distributed, economically developed provinces that had vigorously expanded such projects in recent years required substantial subsidies. Against the backdrop of this surcharge being collected nationwide, impoverished provinces that actually needed financial support—but lacked renewable energy projects—often saw their contributions flow instead to affluent, developed provinces. This has created the peculiar situation where ‘poor provinces subsidise wealthy ones.’ Therefore, the establishment of a national renewable energy development fund—combining the electricity tariff surcharge with dedicated fiscal funds to support renewable energy projects—represents significant progress.
It is reported that the Ministry of Finance has recently completed a draft of the ‘Administrative Measures for the Renewable Energy Special Fund,’ currently seeking feedback from relevant departments. Regarding this, Wang Zhongying noted that certain aspects of the fund management measures require further clarification. He pointed out that based on the current 4-cent levy on electricity prices for renewable energy, the annual total of this fund amounts to approximately 10 billion yuan. Measured against the target of renewable energy accounting for 15% of primary energy consumption by 2020, the 4-cent levy standard still needs to be increased. He suggested that consideration could also be given to increasing the amount of special fiscal funds.