Challenges to China

1
Challenges to Chinas Transition to a Low Carbon
Electricity System

• Fritz Kahrl, UC Berkeley, E3
• Ding Jianhua, E3
• Jim Williams, E3
• Hu Junfeng, North China Electric Power University

2
Chinas Power Sector is the Worlds Largest CO2
Emitter
Energy-Related CO2 Emissions, Global and Chinese
Power Sector
Source IEA, 2009
3
China has Ambitious Goals for Renewable
Generation Capacity
2009 Capacity, Existing and Proposed Targets for
Renewable Capacity
2009 Capacity Existing Target Proposed Target
Hydropower 196 GW 300 GW 300 GW
Wind 18 GW 30 GW 150 GW
Solar 0.3 GW 1.8 GW 20 GW
Biomass 1.1 GW 30 GW 30 GW
Sources 2009 capacity is from CEC (2010).
Existing and proposed targets are from Martinot
(2010).
4
An Incomplete Transition
Centrally Planned Coal-fired Generation Serving
Industrial Loads
Post-Planned Diverse Generation Sources Serving
Diverse Loads
Planning Investment Dispatch Pricing Regulation
5
Chinas Electricity System is Relatively Expensive
Average 2009 Retail Electricity Prices in China
and the U.S., Ranked by Province/State in
Ascending Order
Sources and Notes China data are from SERC
(2010) U.S. data are from EIA (2010).
6
Industry Dominates Load
Shares of Electricity End Use by Sector, China,
1980-2006
Source Data are from CEG (2008).
7
Forecasted Demand Growth in China is still High
2009 Actual and High/Low Forecasted 2020
Electricity Demand, China and U.S.
Sources China 2009 Actual is from SERC (2010)
2020 Low Forecast is from IEA (2009) 2020
High Forecast is from Zhang (2009). For the
U.S., all data are from EIA (2010).
8
An Evolutionary Moment for Chinas Power Sector

• High forecasted growth
• Structural shifts in demand
• Growing environmental awareness and regulation
• Rising wholesale and retail energy prices

9
Reducing Demand Growth is Key for Reducing Share
of Coal
Shares of Coal and Non-Coal Generation, 2009 and
Low and High Demand Growth Scenarios for 2020
10
Regional Power Grids in China
Western Inner Mongolia Power Grid (WIMPG)
State Grid Northwest, Northeast, North, Central,
East Southern Grid South
11
Summary

• Reforms in planning, investment, dispatch,
  pricing, and regulation are precondition for
  power sector decarbonization in China
• Without capacity to better manage and allocate
  costs, will be difficult to meaningfully increase
  share of renewable generation in China
• Progress possible through incremental
  improvements in institutional planning and
  regulatory capacity
• Soft technology transfer in electricity sector
  management should be priority area in OECD-China
  climate policy dialogue