Can China become a world leader in the transition to renewable energy?

On 22 September 2020, President Xi declared China’s commitment to achieving carbon neutrality by 2060, at the 75th Session of The United Nations General Assembly. China joined over a hundred other countries who have made similar commitments in recent years, but as the world’s biggest energy producer with the highest carbon dioxide emissions, this commitment by China is the most ambitious and significant so far.

For China to achieve carbon neutrality by 2060, the country’s energy system will have to build and integrate considerably more renewable energy (RE), reducing its reliance on coal- fired power production.

But simply building more solar and wind farms isn’t enough. The unpredictable nature of weather dependent solar and wind power requires a highly flexible power system that can adapt and ramp up production at times when renewables are not able to meet demand, and also quickly shut down when renewables are back online. This is where flexible technologies such as gas-fired Internal Combustion Engines (ICE) and Energy Storage Systems (ESS) play a critical role in enabling the integration of RE into the power system. 

Ambitious targets vs major challenges

In the summer of 2019, Wärtsilä started working with China’s Energy Power Planning & Engineering Institute (EPPEI) on a study on power system optimisation for the Jiangsu province of China. The study: ‘’Enhancing Power System Flexibility: Finnish Experience and Application in Jiangsu’’ set out to identify the optimal path towards more renewable energy sources (RES) for Jiangsu and the flexible technologies required to ensure grid stability.

Rhonin Zhou, Market Development Manager for Wärtsilä Energy China says that when they started the study at Wärtsilä, they wanted to determine how much and what kind of flexible technologies would be needed to support large scale renewable integration in the Jiangsu power system. “And secondly, very importantly, what benefits would come from having flexible assets in the system. From our experience of over 50 similar power system modelling studies from around the world, we know that combining flexible technologies with RE integration can bring major cost benefits and we wanted to know how big these might be for Jiangsu.’’

Jiangsu province is the perfect subject for such a study for several reasons. Firstly, Jiangsu province is located on the Yangtze river economic belt with a population of over 80.5 million people and is critical to China’s economic growth. Secondly, Jiangsu province experiences four distinct seasons which include hot summers and cold winters that significantly increases peak load demands. Both of these factors put considerable pressure on the energy system and Jiangsu province currently has to import over 18% of its energy to meet demand.

Regarding the study, Dr Shunchao Wang, Head of International Cooperation at EPPEI adds that the  study needed to provide clear recommendations, not just to government bodies but also to the energy enterprises and companies on ground.” It’s important to understand their perspective, as they face a more competitive and volatile market with a lot of uncertainties due to deregulation.

On the one hand energy companies need to guarantee stable and reliable power supply while on the other hand they need to integrate more RE which is a fluctuating supply. We needed to provide well-grounded conclusions and suggestions to help them with this challenge while also helping them understand the consequences of their investment choices,” he continues.

China’s path towards greater renewable integration

Thankfully, Jiangsu province is at the forefront of China’s energy transition and Jiangsu’s energy authority has already proposed taking significant steps to improve the flexibility and adaptability of the system to ensure safe, efficient, clean, and low-carbon energy production. It’s estimated that in 2020 the combined installed solar PV and wind power capacity in Jiangsu reached 15 GW, but Jiangsu’s energy producers will need to significantly increase that if they are to meet ever growing energy demand.

Dr Wang describes the learnings from the power system modelling in the study saying, ‘’It’s crystal clear from the report that RE integration enables significant benefits in terms of reducing carbon emissions and overall energy costs, and to maximise these benefits as much RE as possible should be integrated in the power system. But this is only possible with ample flexible technologies which provide all-important system stability.”

Rhonin Zhou reminds that  a province like Jiangsu is already a big power market; there is room for different types of flexible technology each with their unique benefits. “The power stored in batteries can be added to the system in a matter of seconds and the cost of energy storage continues to come down. Our gas-based ICE power plants can ramp up within just two minutes and are scalable to provide hundreds of MW’s, this could go a long way to satisfying the need for flexibility. We believe a combination of both ESS and ICE power plants will provide the peak regulation and frequency support necessary for the deployment of RE that Jiangsu province needs to increase its energy output while still reducing carbon emissions.’’

‘’We used three scenarios for our system modelling, a baseline scenario that required adding 30 GW wind and 30 GW solar capacity, a moderate RES scenario that required adding 50 GW wind and 60 GW solar capacity, and high RES scenario adding 85 GW wind and 80 GW solar capacity. Previously the energy sector had been focused on a more gradual approach to reducing carbon emissions, but President Xi’s announcement on carbon neutrality last September, has ensured a new level of commitment from all parts of the industry. So, now I feel that the third high RES scenario used in our system modelling has become absolutely attainable.”

Based on achieving the high RES scenario the report calculated a total reduction in carbon emissions of 25% by 2030 and aggregated cost savings of 64 billion CNY. These are two massive benefits that can’t be ignored. When you also factor in that ICE power plants can be converted to using hydrogen or fossil-free synthetic fuels in the future, this will further contribute to reducing carbon emissions, helping China reach carbon neutrality.

‘‘China is already a world leader in installed RE capacity and RE production. But of course, China’s baseload is still predominantly based on coal-fired energy production. Over the next ten years, I believe that we shall see some major changes in China’s energy sector. I can see renewables providing another layer of baseload that will significantly reduce the country’s dependence on coal. Shifting the baseload away from fossil fuels will have a major impact on China’s journey to becoming carbon neutral,” Rhonin Zhou concludes.

China’s role in the global fight against climate change

The rest of the world needs China to succeed in its energy transition if we are to achieve the Paris Agreement target of keeping global warming below 2°C. While China’s energy sector is just one component in the carbon emissions equation, without the energy sector’s active participation in bringing down its carbon emissions, carbon neutrality is not possible.

What is becoming increasingly clear for China’s energy sector is that accelerated deployment of RE within its energy system is absolutely possible with the flexible energy technologies now available. ICE power plants and ESS can be major contributors in providing the necessary flexible capacity.

The environmental benefits are now supported by substantial cost savings and the end result is a more stable and reliable grid that will be able to fuel the country’s continued economic growth. When combining these benefits with the political will to make carbon neutrality a reality, there is every reason to be hopeful that China will indeed become a world leader in the transition to renewable energies.

Leading the way in China EU collaboration

Describing the collaboration between EPPEI and Wärtsilä Energy, Dr Shunchao Wang ends by saying:

“Working with Wärtsilä has been very fruitful for us. They are not just great technology providers but also have a profound understanding of power systems. Their capacity for power system model development, model simulation and scenario development have been extremely helpful and the learnings from our white paper are very applicable for other provinces.

It’s also important to understand context: China and Europe are coming closer and closer in many areas, we can see this in the recent China EU Comprehensive Investment Agreement. I think renewable and low carbon energy will be a very important area for collaboration between China and the EU, and Wärtsilä is taking a very pro-active role in this. The model of collaboration we have developed with Wärtsilä can be replicated across other areas.

Collaborating with Wärtsilä on the Jiangsu power system study has been a good starting point. China is a huge market and welcomes the engagement of international companies, and we look forward to working with Wärtsilä to help promote their low carbon technologies and advanced modelling expertise in different regions across China.”