The low-carbon transition of China's power sector: Scale effect of grid upgrading

Abstract

Whether grid upgrading in China, centered on building trans-regional transmission lines, can promote a low-carbon transition in the power sector is controversial. Since there is no precedent to follow, various countries are interested in learning from China's experience. This paper adopts a two-way fixed effects model based on panel data for 30 Chinese provinces from 2007 to 2019 to reveal the nonlinear relationship between grid upgrading and renewable energy generation. The research finds that: (1) A U-shaped relationship exists between grid upgrading and renewable energy generation, which is robust to a series of robustness checks. (2) When the ratio of transmission lines over Extra High Voltage (EHV) exceeds 0.152, grid upgrading has a scale effect in promoting renewable energy generation to achieve a low-carbon transition in the power sector. (3) Building the EHV grid has made a significant contribution to renewable energy generation, particularly in resource-intensive areas. Conversely, building Ultra High Voltage (UHV) grids has not observed such a positive impact. Finally, targeted policy recommendations are put forward for the low-carbon transition of China's power sector.