China’s goal to become carbon neutral hinges on a unified power market, energy expert says
- China is expected to continue liberalising its electricity market, says Christian Romig of BCG. The pace of renewable energy addition will speed up the process, he adds
China’s rapidly expanding renewable energy production and electricity market liberalisation will open up opportunities for investors, developers and end users, according to an energy expert.
“What we will continue to see in the Chinese electricity market is continued opening up and liberalisation of the way in which electricity is being bought and sold,” Christian Romig, associate director at Boston Consulting Group (BCG), said at the China Conference organised by the South China Morning Post on Thursday.
“This process is accelerating as we see more intermittent, non-dispatchable renewable electricity being generated and put onto the system,” he said. “That in itself requires a more flexible and granular pricing approach to manage effectively.”
Some 400 top Chinese government officials will gather from July 15-18 for the third plenum, one of the country’s biggest annual policy meetings, to set the economic and technology development agenda for the next decade. Expectations are high that power sector reform will be one of the major topics of discussion during the four-day event.
One key aspect to watch is the roll-out of a unified national power market system, which China’s central economic planner announced last year. The National Development and Reform Commission aims to establish a preliminary structure by 2025 and complete it by 2030.
A unified power market is crucial to China achieving its goal of becoming carbon neutral by 2060, by which time the country expects to generate at least 80 per cent of its total energy from non-fossil fuel sources, according to Romig.
Last year, China, the world’s largest greenhouse gas emitter and renewable energy developer, added a record 301 gigawatts of solar, wind and hydro power generating capacity, accounting for almost 60 per cent of the global total.
However, renewable energy utilisation has fallen due to the country’s fragmented power market that lacks flexibility and is currently reliant on provinces balancing electricity supply and demand, with carbon-intensive coal and natural gas power still dominating supply.
“A national electricity market will help to more efficiently price the transfer of electricity from those more far flung regions to the centres of population and electricity demand,” Romig said.
Investors and developers will be able to sell electricity generated from renewable energy projects directly to end users across the country, such as multinational companies, to support their decarbonisation goals, Romig said. End users will have the choice to buy the type of electricity they want and have more access to clean electricity, he added.
For China to achieve net zero emissions by 2060, the country needs to remove, abate, or sequester about 350 megatons (about 39 million tonnes) of carbon dioxide per year from 2030 to 2060, about the same as France’s annual emissions, according to data from BCG. Nearly half of China’s carbon emissions are from the electricity sector.
International energy firms are actively helping China decarbonise its power sector, panellists at the conference said.
EDF, the French utility, has helped design, construct and operate Daya Bay, China’s first large-scale commercial nuclear power plant, and has invested in other low-carbon energy fields such as wind, solar, hydrogen energy and storage, said Song Xudan, senior executive vice-president at EDF China.
Saudi Aramco, the world’s largest oil and gas company by market capitalisation, will leverage its conventional oil supplier ties with China to jointly develop clean energy technologies and help Beijing accomplish its carbon neutral goal by 2060, Mohammed Y Al-Qahtani, Saudi Aramco’s downstream president told the conference via video-link.
