Distributed renewable energy is a crucial strategy for replacing and controlling emissions from loose coal. However, its development has been hindered by market challenges and an underdeveloped management system. Currently, the photovoltaic industry is thriving, and the growing demand for decentralized energy is further driving the expansion of distributed energy systems. The potential for growth in this sector is vast.
The idea of "selling electricity across the wall" for distributed energy is becoming increasingly realistic. In February 2018, China launched its first batch of pilot projects for market-oriented trading of distributed power generation. This initiative was announced in a notice issued by the National Development and Reform Commission and the National Energy Administration on November 13th. The notice outlined key aspects such as the installed capacity of distributed generation, transaction models, the establishment of a transaction organization, the standard for "over-network fees," policy support, and the organization of pilot projects. Market-based transactions have effectively replaced the previous model of "benchmark price plus subsidies," reducing transaction costs and increasing the actual revenue for distributed projects. This shift is expected to accelerate the development of distributed energy.
According to Zhu Mingru, director of the New Energy and Renewable Energy Department at the National Energy Administration, "Distributed energy offers high utilization efficiency, low environmental impact, strong economic benefits, and reliable supply. It is a key direction for future energy development and will play a vital role in transforming power systems." At a recent press conference held by the International Energy Agency and China Energy Network, he emphasized that service-oriented, flat energy supply can improve the grid connection of renewables, enhance system efficiency, and drive changes in energy production and consumption.
The report "China's Distributed Energy Outlook" highlights that many favorable factors are driving the development of distributed energy. With a supportive policy environment, a growing market, and improved regulations, the pace of development is expected to accelerate significantly.
The potential for further development of distributed energy is immense. Although it is one of the main ways to replace and control coal emissions, it faces challenges such as limited marketization, lagging public services, and an incomplete management system. For example, the development of natural gas-based distributed energy has been slow due to a lack of pricing advantages compared to coal-fired power. Projects often struggle to generate sufficient revenue when selling electricity to the grid, and unclear roles between grid companies and project operators have hindered progress.
To address these issues, during the "Thirteenth Five-Year Plan" period, China has gradually increased its support for distributed energy. In May, the National Energy Administration issued a notice encouraging the construction of decentralized wind power projects, aiming to explore efficient development and rational use of local wind resources. In June, the National Development and Reform Commission released guidelines promoting the use of distributed natural gas. According to Zhu Mingru, the government is currently working on implementing a market-oriented direct trading mechanism for distributed power generation and exploring new development models.
The "13th Five-Year Plan for Energy Development" sets targets for 2020, including over 110 million kilowatts of natural gas power generation capacity, with 15 million kilowatts coming from distributed sources, and over 110 million kilowatts of solar power generation, of which more than 60 million kilowatts will be distributed. These figures show that there is still significant room for growth in China’s distributed energy sector.
Due to the localized nature of distributed energy projects, more local governments are recognizing their importance. Provinces like Hebei, Henan, and Shandong have encouraged the development of distributed natural gas combined heating projects. Meanwhile, Shaanxi and Sichuan have set on-grid prices for distributed natural gas power, and cities like Changsha and Shanghai have provided direct subsidies of RMB 2,000/kW and RMB 3,500/kW respectively for new distributed energy projects.
As the tertiary industry grows, so does the demand for decentralized energy. According to statistics from the National Bureau of Statistics, the added value of the tertiary sector accounted for 51.6% of GDP in 2016, up 6.3 percentage points from 2012. As this sector expands, the demand for energy from heavy industries is declining, while decentralized energy demand is rising, further stimulating the growth of distributed energy systems.
Tu Jianjun, director of the China Cooperation Department at the International Energy Agency, noted that modern distributed energy systems can reduce greenhouse gas emissions and air pollution by optimizing the mix of renewable and clean fossil fuels. However, he also pointed out that distributed energy poses challenges to grid stability and may reduce the utilization of existing infrastructure. Future grid planning must take these impacts into account.
Moreover, the widespread use of digital sensors, big data, and electric vehicles is contributing to the advancement of distributed energy. By collecting and analyzing energy consumption data, project designs can be optimized to better meet customer needs. Combining IT technologies with smart devices like electric vehicles or thermal storage can offer new services, while microgrids can integrate various energy sources and loads to maximize efficiency and reduce costs. These innovations make distributed energy systems more user-friendly and appealing.
Simon Muller, an expert from the International Energy Agency, added that integrated energy services are shifting from selling kWh to offering services. With digital interconnection, energy trading can occur peer-to-peer without centralized databases, opening up new possibilities for future energy development. Distributed energy is expected to bring innovation in business models, reshaping how energy is produced, traded, and consumed.
Wuxi Jinle Automobile Motor Factory , https://www.wxjldj.com