Caixin Explains: The Power Grid’s Solar and Wind Problem

As of August 2023, China has achieved a significant milestone by surpassing its 2030 renewable energy target with a combined installed capacity of 1,206 gigawatts (GW) from wind and solar farms. Despite this achievement, challenges remain in integrating these renewable sources into the power grid, as highlighted by an International Energy Agency (IEA) report. China is expected to lead global renewable growth over the next six years, accounting for 60% of worldwide capacity additions, but this will put additional pressure on its grid, which is already facing difficulties in absorbing solar and wind power [para. 1][para. 2][para. 3].

A key challenge for China is the concentration of its energy resources in less populated regions such as the northwest, northeast, and southwest. With energy demand primarily occurring in the southern and eastern urban areas, long-distance transmission becomes crucial. To address this, China has been developing ultra-high-voltage (UHV) transmission lines, which transport electricity over vast distances. State Grid Corp. of China and China Southern Power Grid are leading these efforts, with multiple projects underway or planned. Between 2021 and 2025, China plans to construct 12 such UHV projects to enhance its transmission capabilities [para. 4][para. 5][para. 6].

Despite these advancements, progress in building transmission infrastructure has been sluggish. This delay leads to significant wastage of wind and solar power, according to the Global Energy Monitor. Moreover, the rapid increase in renewable energy capacity, led predominantly by solar power (which is expected to constitute 80% of new installations), necessitates a highly reliable transmission and distribution network to cope with the erratic nature of renewable energy sources [para. 7][para. 8][para. 9].

Renewable energy's generation often doesn't coincide with peak power demand times, pushing the need for advanced battery storage solutions. Consequently, much of this power goes to waste since the grid cannot store and balance demand and supply effectively, especially with the slower coal-fired power plants that are still in use. The IEA predicts that as renewable capacity continues to grow, a considerable amount of power will be wasted due to the grid's absorption limitations, particularly in regions with high concentrations of distributed solar installations like Henan, Jiangsu, and Shandong provinces [para. 10][para. 11][para. 12][para. 13].

To tackle grid integration issues, the IEA suggests accelerating power market reforms and green energy certificate trading among provinces. Such measures could potentially unlock an additional 11% of grid capacity under an accelerated scenario aimed at achieving net-zero emissions by 2050. The green electricity certificate (GEC) scheme in China also promotes the purchase of certificates to demonstrate renewable power usage, thus encouraging broader integration of clean energy [para. 14][para. 15][para. 16].

Despite renewable energy growth, coal still dominates China's power generation landscape. Last year, wind and solar contributed only 15.6% to the total power generation, whereas fossil fuels accounted for 66%. Even though wind and solar power output has been increasing annually, it still lags behind the rapid rise in electricity demand. Furthermore, official reports miss out on a significant portion of power generated from small or distributed projects, presenting an incomplete picture of capacity versus generation growth. Nonetheless, by May 2023, renewable sources had generated 44% of China's electricity, marking a shift in the nation's energy mix [para. 17][para. 18][para. 19][para. 20][para. 21].