Green electricity consumption has great potential but many constraints

China Energy Storage Network News: The "Special Research Report on Improving China's Green Power Consumption Capacity" (hereinafter referred to as the "Report") recently released by the World Wildlife Fund shows that by the end of 2019, China's new energy installed capacity, mainly "wind and solar", exceeded 400 million kilowatts, contributing 630 billion kilowatt-hours of green electricity. However, new energy also faces problems such as insufficient grid-connected absorption capacity, lack of market trading mechanism, and difficulty in landing green certificate transactions. The improvement of green power consumption level is restricted by many factors.

Market power is increasing

Green electricity refers to electricity produced from renewable energy sources such as wind power, solar power and biomass power. Compared with fossil energy, using 1 megawatt of green electricity can reduce carbon dioxide emissions by 822 kilograms, sulfur dioxide by 0.39 kilograms and nitrogen dioxide by 0.36 kilograms.

Since the 11th Five-Year Plan, my country's green power industry has achieved leapfrog development from small to large and from weak to strong, and has formed a pattern dominated by wind energy, solar energy, biomass energy, geothermal energy, etc. Up to now, the installed capacity of wind power, photovoltaic power and biomass power ranks first in the world, and wind power has become the third largest power source after thermal power and hydropower.

Since the new round of electricity reform, green power grid connection and consumption have received a lot of policy support. The "No. 9 Document" of the electricity reform clearly proposed to implement the guaranteed purchase system for renewable energy power generation and solve the problem of non-discrimination and barrier-free access to the grid for renewable energy power generation. In this regard, the "Report" pointed out that when arranging annual power generation plans, local governments should give priority to guaranteed power generation of renewable energy such as wind power, solar energy, and biomass energy. At the same time, wind power and solar power generation are encouraged to try to participate in direct transactions to enter the power market. The amount and capacity of direct transactions will no longer be included in the power generation and consumption plan.

With policy support, the ways and amount of green electricity such as wind power and photovoltaic power participating in power market transactions have been on the rise in recent years. The report shows that in terms of participation, it is mainly used for clean heating in winter in northern regions; in terms of transactions, according to data from the China Electricity Council, in 2018, large power generation groups had a total market transaction volume of 1.37 trillion kWh, a year-on-year increase of 26.4%, accounting for 37.5% of the total grid-connected electricity of large power generation groups. Among them, the cross-regional and cross-provincial transaction volume of wind turbines of large power generation groups reached 16.4 billion kWh, accounting for 41.5% of the wind power market transaction volume.

Consumption capacity is hampered

At present, my country's green electricity consumption is mainly achieved through four ways: direct trading, entrusting power sales companies to sell on behalf of them, selling electricity through walls, and spot trading. However, there are still many challenges in improving green electricity consumption capacity.

The report points out that due to the cost of electricity and technology, green electricity has long been at a price disadvantage and highly dependent on government subsidies. As the proportion of "wind and solar" in the power grid increases, the power grid is increasingly strict in assessing wind farms and photovoltaic power stations to ensure the safety and stability of the entire power system. Taking the "two detailed rules" assessment of the Northwest Electric Power Regulatory Bureau as an example, the maximum error of the daily forecast curve provided by wind farms and photovoltaic power stations does not exceed 25% and 20% respectively.

The report also shows that my country currently lacks a market-based trading mechanism for green electricity, and has not yet fully formed a market-based pricing mechanism. Due to regional barriers and local protectionism, regional power markets have not yet been opened up. With the continuous increase in the scale of cross-provincial and cross-regional power transactions in recent years, the problems existing in power transactions have gradually been exposed.

At the same time, the low maturity of the distribution and sales power market has exacerbated the low level of green power consumption. The report points out that the current automation coverage rate of my country's distribution network is low, and power grid investment is mostly concentrated in the transmission network rather than the distribution network. In addition, the distribution network faces the challenge of a large number of distributed renewable energy power generation on the power supply side. Only by building a strong and intelligent distribution network can a large number of renewable energy sources be integrated into the distribution network.

Regarding the green certificates that the market is concerned about, the report believes that they have not formed a broad social influence. After purchasing green certificates, electricity users cannot conduct secondary transactions and cannot enjoy other preferential policies. They lack sufficient appeal to enterprises and individuals, and their prices are more than 10 times the international average.

Data shows that up to now, the trading volume of green certificates in my country is far less than the issuance volume. The trading volume of wind power and photovoltaic green certificates totals 26.7837 million, accounting for only 3.74% of the huge number of green certificates issued in my country. Among them, the trading of photovoltaic green certificates has been cold, with a cumulative trading volume of only 160. The only provinces with more than 30 trading volumes are Shandong, Qinghai and Jiangxi.

Multiple measures to promote consumption

In response to the above problems, the report recommends further promoting new energy power market transactions. As for the wall-to-wall electricity sales model, with the announcement of the first batch of 26 distributed market-based trading pilot areas in May 2019 and the public solicitation of opinions on the Jiangsu Province Distributed Generation Market-based Trading Rules (Draft for Comments), "wall-to-wall electricity sales" has become the key to the full marketization of distributed power generation projects.

The report points out that demand-side management can also increase the space for green electricity consumption. The "No. 9 Document" on electricity reform clearly proposes to actively carry out demand-side management and energy efficiency management, and promote supply-demand balance and energy conservation and emission reduction through the implementation of demand response. Under the new situation, in addition to saving electricity, power demand-side management should also promote the effective consumption and utilization of renewable energy power from the demand side.

To promote the development of green certificate trading, the report recommends implementing more supporting incentive measures for entities and individuals that subscribe to green electricity, increasing users' willingness to actively purchase green electricity, and opening up green certificate price restrictions, allowing green certificates to be traded secondary to truly realize their financial value.

In terms of technology, the report points out that an innovative wind, solar, storage and charging integrated model should be adopted. "In the past, the construction of electric vehicle charging stations dominated by the power grid faced problems of insufficient land resources or grid access, while the wind, solar, storage and charging integrated model can solve the distribution network problem within limited land resources."