Curtailment of renewable energy in Northwest China and market-based solutions

Abstract

In 2016, solar and wind energy production were greatly curtailed in China, especially in its northwestern region. This paper identifies administrative factors and market barriers as the main causes of renewable curtailment. In 2017, the Northwest Power Grid (NWPG) successfully implemented a variety of approaches to reduce wind and solar curtailment. In this paper, we analyze the change in power generation, expansion of renewable energy delivery, and electricity-replacement projects across provinces that occurred in 2017. While acknowledging the practical results of the NWPG's efforts, we identify challenges that the northwest still faces in integrating renewable energy. We argue that trans-regional administrative barriers are preventing the effective utilization of renewable energy nationwide. To address those barriers, we explore market-based mechanisms for promoting the integration of large-scale renewable energy. In addition to long-term contracts for renewable energy across provinces, both spot-market and the ancillary service market would facilitate the uptake of renewable energy. In addition, price signals should be used to guide peak shaving. Market mechanisms will be insightful to dissolve barriers and enhance utilization of renewable energy throughout the country.