Author Archives: Kaare Sandholt

Kick-off of the China Solar Roadmap

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This week the preparation of a comprehensive Chinese solar roadmap was launched in Beijing. The roadmap will look at solar PV, concentrated solar power (CSP) and solar thermal technologies and analyse the technology development trends, international and national market trends as well as the possibilities and challenges for the Chinese solar manufactures. The roadmap will be finalised by the end of 2013. Solar_thermal_in_Beijing

The Solar Roadmap is sponsored by the Sino-Danish Renewable Energy Development (RED) Program and it is supervised by the China National Renewable Energy Centre – CNREC. The analyses will be carried out by a large number of leading Chinese experts under the umbrella of China Renewable Energy Society supported by international solar experts participating in the IEA Solar Technology Initiatives.

At the kick-off meeting on 29 January 2013 I had the possibility to wrap up the plenum discussion with these words:

“We already have a number of international and national solar roadmap and it is of course very useful to learn from these experiences. But it is also important to realise that the Chinese roadmap should focus on the Chinese context. The solar market is a global market with China as one of the major players on the manufacturing side. Thus the roadmap should look into the  international market development expectations. Also the technology development is international and international development trends are therefore important frameworks for the Chinese roadmap. But the Chinese roadmap must address the challenges and possibilities for solar in the Chinese energy system, and also address the short term an long term possibilities and challenges for the solar manufactures.

The Chinese ambitions on deployment of solar installations are very ambitious, especially on the PV installations. This month NEA announced a target of 10 GW of installed capacity for 2013, about 10 times the installation in 2012. For solar thermal, especially large scale systems, the potential might not have be fully understod yet. For both technologies this roadmap will be very important to clarify both the short term and long term challenges and possibilities and also to look into the different policy measures suitable for ensuring the deployment.

The Chinese RE industry is wisely considered as one of the strategic emerging industries in China, and the Chinese solar PV Industry has certainly shown its ability to move quickly. But today the PV industry is in trouble. Production capacity is much higher than the current market demand, and it is difficult to quickly adjust this capacity downwards again. This partly explains the urgent need to stimulate the national market, but even the 10 GW goal might not solve the problem for the PV-industry. At the same time the technology breakthrough of new systems might be just around the corner, which again will challenge the Chinese manufactures. Will they be able to become front runners in this development or will they be stuck with the old technology solutions? I think this roadmap will be particular important for the solar industry as a basis for understanding both the national and international market and as a tool for understanding the emerging technologies which are necessary to implement in the future in order to survive and grow. I hope the team will use the working process to frequent consult with the industry, both to get inspiration and input but also to provide and discuss the result with this very important stakeholder group.

Should the roadmap be consistent with the current national energy plans? Not necessarily! Road maps should point to possibilities and expand the knowledge of these technologies. Roadmaps are in my opinion front runners for energy plans. Then of course the energy plans might have other considerations which will deviate from the roadmaps and that is actually no problem to have these different perspectives. So I encourage you to be bold regarding potentials and possibilities including ambitious long time goals but also to be realistic regarding the challenges and needs for implementing measures.

I am very happy to see that the working team include the best Chinese solar experts. This is very promising for the quality and success of the roadmap. I am of course also happy that it has been possible to include the Danish experts in the work contributing with experiences from Europe and from the important work in the IEA technology groups.

I wish you good luck with this important and exciting study. I am looking forward to follow the work and to see the first roadmap by the end of this year”.

 

The biggest obstacle to wind power development in China

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Curtailed wind power gives record loss for wind power producers in 2012. Recent estimates reveals that 20 TWh or between 20 and 30 percent of the total Chinese wind power production was curtailed in 2012, according to Qin Haiyan, secretary general of the Chinese Wind Energy Association as cited in Windpower Monthly. The curtailed electricity has the value of CNY 10 billion, and the producers have not been compensated for the loss. The curtailed electricity could lower the local and global pollution and for the society as a whole it would be cheaper to curtail the coal fired power plants instead of the wind farms. To put it simple: Curtailed wind power = more pollution + more costs + less incentives for new wind power.Jilin_wind_farm

The large amount of curtailed wind power is in my opinion the biggest obstacle for the Chinese government’s ambitious plan for wind power deployment. It is difficult for wind power developers to justify investments in new wind farms if you know that up to 40% of the annual production will not be sold. And if you are forced to establish new wind farms due to quota system or similar, you will tend to invest in cheap wind turbines with low efficiency, since high efficiency will be punished by even more curtailment.

So it is absolutely necessary to improve the situation for the wind farms quickly in order to get the benefits from wind power and encourage more investments.

Then what should be done? Well in principle the solution is straight forward: The electricity system must be more flexible and regard wind power (and solar PV) as an integrated part of the system – not as an add-on to the thermal system. Today the thermal power plants have no or few  economic incentives for being flexible, since the income is almost solely depending on sale of electricity. Also the dispatch centres should have better possibilities and incentives for a more dynamic use of interconnectors to neighboring areas. When the economic incentives are in place the technical obstacles would soon disappear – all experiences from e.g. Europe show this.

In practice it might not be as simple. It is alway difficult to change the division of benefits and costs between different stakeholders and the thermal power plants would potential have difficulties in recovering investments if they have to cut down on the number of hour they can produce during the year. But if the Chinese government want to fulfill it’s ambitions on renewable energy, a solution must be found quickly. My guess is, that this issue is on top of the agenda for the NEA this year.

PS: The picture is from a large wind farm in the North West of Jilin, one of the provinces with most curtailment.

 

China 2012: Slowing down on RE deployment

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Fresh figures from China’s State Electricity Regulatory Commission (SERC) shows stagnation in the 2012 deployment of renewable energy in China. According to SERC, 15 GW of hydro power,  13 GW of wind power and 1 GW of solar power were established in 2012. These figures are less than the similar figures for 2011 for all three technologies.

The stagnation in the annual new installed capacity of wind power and solar power underline the serious and deep crisis for the Chinese RE industry. Both the wind industry and the solar industry are suffering from lack of orders and huge mismatch between production capacity and market demand.annual_installed_RE_capacity

NEA’s recent announcement of ambitions for 2013 aims to break the trend and to reestablish old growth trends. As shown in the figure comparing the annual installed capacity in 2010, 2011 and 2012 with the NEA ambitions for 2013: More hydro, more wind, and 10 times more solar!

 

2013 to become a big year for RE in China

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The National Energy Administration in China have high expectations for the development of renewable energy in China in 2013. The 12th 5 year plan for renewable energy, which was launched last year set the targets for 2015 for the various technologies at a fairly ambitious level; 260 GW hydro power, 100 GW grid connected wind power and 21 GW solar power should be installed by 2015. Compared to the 2011 level this gives average annual increases of 12 GW per year for hydro power, 13 GW per year for wind power and and 4.5 GW for solar power. But NEA now expect 21 GW hydro power, 18 GW wind power and 10 GW solar power to be installed in 2013 – all higher the the average yearly targets from the 12th 5 year plan.

nea-2013

So despite the current challenges for integration of renewables into the Chinese electricity grid, including lacking regulation and incentives for distributed solar power, NEA is quite optimistic or ambitious regarding the possibilities for deployment of RE in 2013.

Are the ambitions realistic? Well past experiences have shown that massive yearly deployment is possible, so it is difficult just to judge the 2013 targets as unrealistic. On the other hand the current challenges for integration and deployment cannot be easily delt with. Action is needed to avoid curtailment by making the electricity system much more flexible. And the deployment of solar power requires focus on large scale deployment of small scale solar power systems, roof-top and building integrated systems. And the barieres for such system might be underestimated when the 2013 targets were set. However, the signals from NEA is very encouraging: RE must have a bigger role in the Chinese energy supply in the future, and with these ambitions it is sure that a lot of effort will be made to quickly remore the barriers for deployment and integration of RE.

(Let me add that the figures might not be as easy to compare that shown. The figures for the 12th 5 year plan are grid-connected capacity, which for wind power make a big difference from the total installed capacity. It is not clear if the NEA 2013 figures also are grid-connected capacity or total installed capacity)

The minutes from the NEA working meeting where the targets were set, can be found on the NEA web site. The meeting ended up with eight focus areas for NEA in 2013, including increased domestic energy supply, more renewable energy, control of the total energy consumption, preparation of an energy sector reform, enhanced international energy cooperation, more research and demonstration, electricity to people without electricity supply, and strengthen of the management of the energy sector. It looks like a quite busy year for the energy administration, also in 2013 :-).

 

Strong analytic platform for RE policy research in China

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China National Renewable Energy Centre (CNREC) develops a comprehensive toolbox for development of policy strategies for renewable energy in China. 

Since the launch of CNREC in February 2012 much effort has been put into the development of an analytic platform which would enable the centre to make high quality research on policy strategies and RE development in China. The development has been inspired by international best practice solutions and especially researchers and experts from Denmark, Germany and United States have given valuable input to the development of the platform.

The platform consists of data, software-tools, methodologies and reports, supporting each other:

  1. The basic information about renewable energy technologies are currently being collected in a technology data catalogue for the most important RE technologies. Not only the current status is described but also the future development trends to 2050.
  2. A suite of simulation tools are being developed for comprehensive analyses of the impact of RE deployment for the whole Chinese energy system in form of scenarios for the development to 2050.
  3. A number of technology roadmaps are developed. Roadmaps for wind energy and biogas are already available at the CNREC information portal, and in 2013 roadmaps for solar energy and biofuel will be prepared.
  4. Several scenario studies are currently part of the CNREC-work portfolio. Focus is on how to obtain a high share of renewable energy in the Chinese energy system in 2050 and how to set up a feasible development path in order to realize such a vision.
  5. All these activities gives a solid basis for policy action plans on support schemes, regulatory initiatives etc.

CNREC Platform

A bit more elaborated description of the CNREC platform can be found in this presentation: CNREC recent development, which was one of the topics at a meeting in the Danish ThinkChina initiative in December 2012.

 

 

ERI: Make NEA an Energy Ministry focusing on demand side and non-fossil fuels

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In a remarkable clear report “China Energy Policy” the Energy Research Institute under NDRC (ERI) recommends much more focus on the energy demand side and on non-fossil energy supply. ERI recommends to strengthen in energy administration by increasing the National Energy Administration grow into an Energy Ministry taking more responsibility for the energy demand side from other ministries. Not only the energy intensity should be controlled but also the total energy consumption. And non-fossil fuels should have priority in the supply chain, reducing the current heavy dependency on coal and oil. Taxes and other financial policies should be the main driver for the future deployment of non-fossil fuels – basically renewables and nuclear power.

Stop expansion of long-distance transport of energy

Another interesting recommendation is to let import substitute long distance transport of coal and electricity from the North West China to the large energy consumers in the South East China. The idea that China should strive for coal self-sufficiency should be abandoned. Instead ERI suggest that the growth in energy consumption in the South East China should be covered by increased import of coal and LNG. Actually ERI finds that China by increasing the import of LNG could increase it’s pricing power. Last but not least ERI recommends that long-distance transport of electricity using Ultra High Voltage (UHV) transmission lines should be avoided due to the high cost and the increased risk for nation-wide power outages. The power supply of the South East coastal regions should be up to the the region itself. This recommendation is in sharp contrast to the current State Grid strategy where the UHV lines have an important role. Also the ERI recommendation could reduce the possibilities for obtaining a high share of renewables in China’s energy system as the resources of wind power and solar energy are focused in the North and North West of China. But nevertheless an interesting viewpoint worth further analyses in i.e. long term scenario analyses.

National and global conclusions and recommendations

“China Energy Policy” is a comprehensive analysis of the next five years development of the energy system in China, including 12 conclusions and 10 policy recommendations, covering both national  and international topics. Very interesting reading for everyone interested in the Chinese viewpoint on national and global energy policy. The executive summary can be found on this link, and a hardcopy of the whole report can be purchased on the ERI web site.

 

High expectations for solar PV development in China – but can they be met?

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The solar PV development in China and in the world are one of the main themes in the brand new issue of China Renewable Energy Magazine from CNREC 

Experts from Energy Research Institute of NDRC, China Photovoltaic Society and State Grid Energy Research Institute give in the new issue of the CNREC RE Magazine a quite comprehensive and in-depth view of the recent and future development of the solar PV industry and market (the figures below are from the magazine).

The 12th 5-year plan set out clear and ambitious targets for the development of solar PV in China. 20 GW installed capacity is the target for 2015 and 50 GW is the target for 2050. In 2011 3.5 GW is installed. The plan focuses both on large PV power plants and on distributed PV systems, including roof-top and building integrated installations. But is it possible to have such a rapid development in China the next 5-10 years?

 

From an incentive point of view, Wang Sicheng from NDRCs Energy Research Institute (ERI) points out that the RE law from 2005 and 2009 is a sufficient overarching framework for the development of solar PV in China. The law has been follow by detailed implementation of support schemes for demonstration project and a Feed-In Tariff (FIT) for large PV power plants. Nevertheless there are still a number of barriers for the large PV installations:

  • Difficulties in connection to the transmission grid
  • High Land use tax
  • Unclear lenght of the FIT subsidy
  • Severe delays in the payment of the subsidy
  • Bad timing between planning of the PV power plants and the grid planning

The development of distributed PV installations has until now happened as part of the demonstration programs, e.g. the Golden Sun projects. And here the development has run into  a series of barriers:

  • Difficulties in connecting to the distribution net
  • Difficulties in setting up contracts with the grid companies
  • Unclear or missing standards for grid connection etc.
Wang Sicheng point to clear and comprehensive planning procedures for the large PV plants, technical and pricing standards as main components for implementing the targets for solar PV in China. Also allowing developers to construct distributed system on buildings owned by others would help the implementation. And first of all – clear rules for the subsidies for all in form of reasonable FIT instead of investment grants.

Zhao Yuwen from China Photovoltaic Society (CRES) look at the solar PV development from an industry point of view. In general he agrees with the ideas of promoting FIT for solar PV and to have better timing between grid and solar PV development. On top of this he points to some industry specific challenges. It is a big challenge for the Chinese solar PV industry that the Chinese market only is around 10 percent of the Chinese production. A more solid home market is needed to avoid severe damage from protectionism in international trade. Furthermore the Chinese solar PV industry have problems to become competitive with foreign manufactures when it comes to some of the components in solar PV panels, e.g. polycrystalline silicon and some high-end raw and auxiliary materials.

Finally Cao Shiya from the State Grid Energy Research Institute looks at the technical and economic development of different solar PV systems. One of the main points is that the rapid development of installations allows for further improvement of the levelized cost of electricity from solar PV. He expects the cost to be half of the current cost in 2020.

There is a wealth of information about the past, present and future development of solar PV systems in all three articles, not only for China but also for the global development. If you are interested in solar PV in China, CNRECs 3th RE Magazine is a must-read. On top of this you get a lot of other interesting article about policy, industry and data about renewable energy. Download the Magazine from CNREC web site in Chinese or English.

 

Reducing Beijings air pollution – steps in the right direction

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In the small streets of Beijing is is very common to see bike-trucks loaded with coal briquettes, especially when the heating season starts. These briquettes fits nicely into the small stoves in the hutongs and has been the prime source of energy for heating and cooking for the households in Beijing. But the coal burning is contributing to the heavy air pollution in Beijing and the Beijing government thus wants to reduce the use of the briquettes.

coal briquettes in China

Since 2003 (after a pilot period from 2001) the government has supported a program for installing electricity for heating and cooking in inner Beijing. In 2012 21,000 households will get rid of the coal stove which brings the total number of households switching from coal to electricity to more than 200,000 since the beginning of the program. The households receive a subsidy to the electricity price in the night time in order to make it able to compete with the cheap coal. See the information from NDRC here (in Chinese)

The massive amount of cars in Beijing are often blamed for the air pollution. But actually the coal consumption is a worse polluter. Of course the coal fired coal plants in the Beijing area are big sinners but also these small stoves which leads the pollution directly into the streets and houses are very unhealthy – like the London smog years ago, that mainly was created by small coal stoves. So this program is definitely a step in the right direction for the whitings. In other areas in Beijing district heating is a more sustainable solution. Beijing has Chinas largest district heating company, Beijing District Heating Group which has extensive cooperation with international companies including Danish companies e.g. as part of the energy cooperation between the City of Copenhagen and the City of Beijing. One of the challenging issues regarding district heating is to change the payment from an area-based payment to a payment based on actual consumption. This is needed in the process of enhancing energy efficiency but requires installation of meters and a new set-up of accounting – a long-term process.

Beijing District Heating Group owns some of the power plants in the Beijing area, delivering heat to the district heating system. And the power plants does not only contribute to the local pollution but also to the global CO2 emission. If you want to monitor the emission of CO2 from power plants in Beijing (or other places in the world) have a look at the Carma website. I haven’t checked the accuracy of the Chinese data, but the web site in it self look interesting. As mentioned in an earlier blog, Beijing is about to change the coal fired power plants into natural gas fired plants before 2015, and this should of course be reflected on the web site when the changes happens.

The Beijing air-pollution is still a major problem for people living in the city. But the steps taken are all steps in the right direction – and I would say, the steps are more than needed!

 

Next steps in reforming the Chinese power sector

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Power sector reforms are necessary to make the energy system sustainable. This is the message from top leaders in Chinas energy administration. Here is a suggestion for prudent next-step actions in this long-term reforming process.

Reforming the Chinese power sector is often mentioned as a prerequisite for developing a sustainable energy system with a large share of well-integrated renewable energy. See e.g. the article in CNRECs Energy Magazine written by Shi Lishan, Deputy Director of New Energy and Renewable Energy Department of the National Energy Administration NEA. But it is clear that China should not just copy other countries market reforms and market set-ups. After all, globally the market reforms still have to prove that they actually are promoting sustainable energy systems, and Chinas special context has to be taken into account when designing the reform process. So what to do?

Many ideas has been brought to the table, and one of the more convincing papers with ideas is actually more than one year old, but still highly relevant. The Regulatory Assistance Project published in september 2011 a draft paper: Power Sector Policy in China: Next Steps (Chinese version here) with the following suggestion for next-step actions:

  1. Develop improved planning methods to identify the least-cost mix of supply and demand-side options.
  2. Create an industry structure and competitive bidding processes to acquire the identified supply and demand-side resources in the least-cost manner.
  3. Adopt generation pricing and other practices to allow improved implementation of China’s new power plant dispatch rules.
  4. Redefine the role of transmission providers (i.e., the grid companies) to specifically address long-term system planning (including demand-side management), investment, dispatch, and renewables integration issues.
  5. Redefine the role of distribution companies to explicitly include investment in energy efficiency.

I am quite excited about this suggestions. The first precondition for changing the system is to change the planning system to focus on least-cost options. And combining supply planning with planning for cost-efficient demand side measures is basically very interesting in a country like China who now has adopted the “dual control” principle of setting targets for both the energy intensity and for the total consumption. Such a planning process is also well suited to an electricity system where the market reforms are not fully implemented. US and Europe introduced Least Cost Planning and Integrated Resources Planning in the 80’ties and early 90’ties for the big power producers, but this planning mechanisms disappeared again as a consequence of the market reforms. But for China a full market reform is risky in the sense of the small number of players leading to inefficient market pricing and market power situations and introducing such integrated planning methodologies in China makes sense to me.

Adressing the system dispatch principles is definitely one of the core actions to ensure a flexible and sustainable energy system. This also includes reforming the pricing mechanisms for the thermal power plants in order to ensure the survival of these plants even if the number of full load hours are reduced due to integration of renewables.

The paper is quite easy to read and in only 13 pages you get a quite good insight in the current situation (which has not changed since last year) as well as a good argumentation for the above mentioned next-step actions. Take a look at the paper and let me know what you think!

 

China to become new Global Green Growth Forum Partner

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When the 2012 Global Green Growth Forum (3GF) opens in Copenhagen on 8 October a high-level Chinese delegation lead by NEA viceminister Liu Qi will be among the participants, and China will formally be new partner in the cooperation, which include Denmark, the Republic of Korea and Mexico. Also Qatar and Kenya will be new partners.

The 3GF is an alliance focusing on international cooperation between government as private companies on a steady and rapid green growth. The 2012 Forum has “resource efficiency and growth as overarching theme with a number of different seminars during the two-day event. China has a special country session and will also be active in other seminars.

Find the agenda and more information about the 2012 3GF here. I will follow up after the forum in a new blog entry.