Electricity demand response in China: Status, feasible market schemes and pilots

Abstract

Demand Response (DR) has been extensively developed and implemented in the US and Europe. However, DR hardly exists in many developing countries for similar problems such as rigid power market and state monopoly. With the increasing imbalance between supply and demand in China's power industry, the government has issued new policies on DR and approved the first batch of pilot cities. China is setting a good example of how to encourage DR under monopolistic electric market and open up the market to aggregators and DR suppliers. This paper summarizes the current DR status, feasible DR market schemes and DR pilot projects in China. First, electric power system reform, renewable energy policies and power industry development are reviewed, highlighting the problems associated with the current dispatch mechanisms of DR policies and markets. New DR programs and DR-related policies are also introduced. On this basis, the driving forces and challenges associated with DR in China are analyzed. The major challenge is the lack of a suitable market mechanism for the current Chinese power industry. Hence, this paper presents six feasible strategies that fully utilize the existing policies. Additionally, the latest DR applications in different pilot cities are summarized and analyzed.