As Wind Power Expands in China—What's Been Learned?
By Philip Gass, September 15, 2016
Over the past decade, wind power has taken off worldwide. From 2005 to 2015 global cumulative installed wind capacity grew from just less than 60 GW to over 430 GW. China has been a global leader in this exponential growth with an unprecedented deployment of wind power capacity growing from 1.26 GW in 2005 to over 145 GW by the end of 2015, over a third of the global total.
IISD’s study Wind Power in China: A cautionary tale takes a closer look at the drivers behind the impressive development in China in order to understand the complex connection between the policy goals, policy measures and development impact. In particular, we considered how challenges related to curtailment of generation and delays in connection are being addressed. Our goal was to identify lessons in the hope that this will inform future policy measures in China and elsewhere.
With respect to delayed connection, the expansion of national wind power resources has outpaced the construction of transmission; construction plans for wind farms and grids are not aligned; and power operator supports are weaker than those for power development.
Challenges have also been experienced with curtailment, where the primary issue is a mismatch between supply and demand of power. Curtailment has occurred in areas when growth in power demand has not matched power supply growth and limited transmission capacity prevents moving energy to regions where demand is greatest. Technical issues with ramping up and down conventional coal power also mean that wind is often easier to curtail. Fixed payments also provide no additional reward for thermal generators to act as reserve to wind or act in a flexible manner to support increased wind power.
The government has taken steps to address these issues. The 2012 White Paper on China’s energy policy highlights the need to increase grid capacity. The 12th Five-Year Plan also refers to the need to coordinate development of grid and capacity, while there is a suggestion that the next Five-Year Plan will address the goal of resolving curtailment.
Lessons can be learned from China’s wind power challenges and attempts to address these issues of governance, economics and technology.
With respect to governance, these include:
- System design: A system of guaranteed run hours provides little incentive for generators to scale back coal generation, and neglects the environmental impacts of fossil fuels.
- Incentives for dispatch: When significant levels of renewable capacity are added to a system, the rules and incentives governing the dispatch of all sources need to be considered and adjusted to ensure renewables are prioritized.
- Target setting: Setting targets in terms of capacity has helped to fulfil the objectives of wind turbine deployment, and facilitated the growth of a turbine industry. Targets for energy production would give an incentive to ensure that all wind farms are connected to the grid and that all power generated is dispatched.
- Planning: Delayed connection and curtailment reflect a need for effective planning.
Regarding the economics of wind power, China’s experience suggests that:
- Pricing: A market-based system, where prices are higher at times of peak demand, would provide incentives for flexibility that renewable energy sources could provide, or a two-part tariff with part of the tariff dependent upon provision of capacity, would be an alternative to guaranteed run hours for thermal power that would be more effective in supporting renewables.
- Subsidies: While the feed-in tariff system in China supported the deployment of wind energy, it also encouraged development in the resource-rich Three North Region beyond the level that could be accommodated by the grid. This experience points to a need for subsidy policy to be responsive to changing conditions.
Finally, on the technical side, China has learned that:
- Capacity and infrastructure: The development of wind power capacity needs to be matched by the development of supporting infrastructure, especially where there is a mismatch between areas of resource supply and demand.
- Linking and expanding balancing areas: Expanding balancing areas can facilitate the integration of renewable energy, since this smooths the variability of generation, and thus improves the accuracy of forecasting.
- Energy system viewpoints: Renewable resources, in particular wind power and solar power, have been regarded as an add-on to the existing power system, rather than part of the system. This suggests the need to update policies and develop, where not present, an understanding that renewable energy is a crucial component of an energy system.
In some ways, China’s current challenges with wind power result from the country’s rapid successes. Capacity has expanded quickly, and the domestic industry has grown at an impressive rate. Rather than a lack of supply, the challenges of curtailment and delayed connection are issues of getting supply to demand. This could be seen as an enviable problem by many countries looking to expand renewables. The issues China has faced, as one of the global early-actors on wind power, provide important guidance for other countries and project developers looking to replicate their success and limit their challenges.
 These figures refer to the total installed capacity, of which some portion may not have been connected to the grid. See the Global Wind Energy Council for latest figures (http://www.gwec.net/global-figures/interactive-map/)