Navigating Energy Integration Through Policy in China
China’s ambitious energy reforms are transforming its power system to integrate more renewables and improve flexibility. Insights from the IEEE conference highlight how policy, market reforms and innovation are driving energy integration and addressing challenges like system flexibility, market coordination, and carbon trading.
This fall, I had the opportunity to attend the 8th IEEE Conference on Energy Internet and Energy System Integration (EI2) in Shenyang, China, supported by a grant from the Kleinman Center for Energy Policy. While the discussions spanned technical topics, a recurring theme was the significant role of policy in shaping energy systems that integrate multiple energy sources.
China’s recently enacted Energy Law is a pivotal policy aimed at fostering renewable energy development and coordinating diverse energy systems. This law represents a step toward addressing the systemic challenges of energy integration. At the start of this decade, the 14th Five-Year Plan emphasizes building a modern energy system that is efficient, low-carbon, and resilient. To support full integration, China is moving towards a more interconnected national grid and is working to harmonize market rules across regions to allow for better coordination and flexibility. Achieving deeper power connectivity, however, presents a significant challenge that will require infrastructure investments alongside regulatory reforms that enable seamless coordination between regions with varying levels of renewable energy penetration.
Power market reforms have played a critical role in advancing integration. Starting with the 2015 reform, China began transitioning to a market-oriented electricity system to improve efficiency, transparency, and competition. More recently, the 2022 reform proposed a unified national power market by 2030 to facilitate the coordination of inter-provincial and cross-regional energy trading. Recent advancements include the development of a national power spot market and the introduction of a coal power capacity pricing mechanism. These mechanisms aim to incentivize the transition of coal plants from baseload generation to flexibility services, such as ramping and seasonal balancing. To unlock the full potential of these reforms and align with system needs, further pricing and incentive adjustments should be considered.
A critical theme at the conference was the importance of system flexibility in supporting energy integration. As China increases its share of variable renewable energy (VRE) sources, the 14th Five-Year Plan calls for improvements in flexibility across power generation, transmission, and consumption. For instance, coal power flexibilization—which involves retrofitting coal plants to adjust output more quickly—was discussed as a near-term solution to address fluctuations in renewable generation. Flexible resources, such as energy storage and demand-side management, play a crucial role in responding to rapid load changes and mitigating the effects of grid disruptions. These resources can help ensure a stable power supply during extreme conditions by optimizing commitment and dispatch, creating a more resilient energy system. However, scaling these technologies requires capacity and ancillary market reform and grid modernization to overcome barriers such as limited market participation and infrastructure mismatch.
At the conference, I presented my research on optimizing the scheduling of a low-carbon combined energy system, focusing on increasing renewable energy penetration and incorporating carbon trading mechanisms. I developed a stochastic optimization model that addresses the uncertainties associated with wind and solar power variability while also managing the emissions from traditional coal-fired power plants. This approach aims to optimize the decisions and operations of various energy sources in both day-ahead and intraday markets, demonstrating the potential for cost reductions and enhanced system reliability. This valuable experience provided not only a platform to share my work but also an opportunity to engage with global experts, broadening my understanding of the collaborative efforts needed to create sustainable and resilient energy systems.
Manling Hu
MES CandidateManling Hu is a Master of Environmental Studies Candidate at Penn. She is also a research assistant supporting research on energy insecurity and utility disconnections at the Energy Justice Lab.
