Energy Insider: China Releases First National Rules for Electricity Spot Markets, New Solar Capacity Soars

China Releases First National Rules for Electricity Spot Markets, New Solar Capacity Soars

Workers install power conductors in Zhangjiakou, Hebei Province on Sept. 21. Photo: VCG

In this week’s Caixin energy wrap, we analyze China’s biggest climate and energy news on policy, industry, projects and more:

• First national rules for electricity spot market released

• Sinopec dives deeper into geothermal energy

• Staggering growth for newly installed solar capacity

• China’s Vice President meets with U.S. climate envoy

• Over three-fourths of Chinese buses run on new energy

In focus: China releases ‘landmark’ electricity spot market rules

What’s new: China’s top economic planner, the National Development and Reform Commission (NDRC), and the National Energy Administration (NEA), on Sept. 18 published the country’s first national rules for electricity spot markets.

The trial “basic rules” clarify how electricity spot markets should be operated and managed, and lay out a plan for their future development.

In particular, they make clear the main purposes of electricity spot markets, chief of which is to create price signals for electrical energy that can reflect the “characteristics of time and space, and changes in supply and demand,” and to exert the “decisive role” of the market in the allocation of electric power resources.

Why it matters: Although China has been piloting provincial electricity spot markets since 2017, there had been no nationwide standards to guide their operation prior to Monday’s release of the new rules, which are set to take effect on Oct. 15.

The move is a “landmark event” in the country’s electricity market development, Zheng Ying, a guest researcher at the Sichuan Energy Internet Research Institute, Tsinghua University, told Caixin.

“[This] shows that China’s electricity spot markets are moving away from its piloting stage towards a new phase where they will be developed and implemented on a national level with unified rules and standards,” she explained.

Industry: Sinopec dives deeper in supplying geothermal heating

What’s new: China Petroleum & Chemical Corp., the state-owned energy giant known as Sinopec, announced on Sept. 14 it was expanding its supply of geothermal heating, a sustainable heating method that uses the natural stable temperature under the ground to warm buildings.

By the end of this year, the company’s cumulative heating coverage is expected to exceed 100 million square meters and its geothermal service will grow to more than 60 cities in over 10 regions, it said in a social media post.

The announcement was made on the eve of the 7th World Geothermal Congress, a three-day event hosted by Sinopec. The conference, which ran from Sept. 15 to 17, saw more than 1,400 participants from 54 countries discuss matters including technological innovation, industrial development, and cooperation, Xinhua reported.

Earlier this month, Sinopec started drilling what it claimed to be China’s first geothermal exploration well that would reach 5,000 meters below ground. Sinopec said the well, which is being drilled in the city of Haikou, will help it determine the geothermal potential of South China’s Hainan province.

Why it matters: One expert told Caixin they expected Sinopec’s enhanced efforts to act as a catalyst for fast-tracking the exploration and utilization of geothermal energy as well as the development of geothermal technologies in the country.

Wang Yongzhen, an associate professor at the Department of Energy and Power Engineering at the Beijing Institute of Technology, said the news could spur more Chinese companies to start researching and developing geothermal heating technologies.

Data: China adds 113 GW of solar power capacity in first eight months

What’s new: China posted a 154.5% year-on-year growth in newly installed solar power capacity in the first eight months of 2023, according to Caixin’s calculations based on latest official data.

The data, released by the National Energy Administration (NEA) on Sept. 19, showed that 113.16 gigawatts (GW) of solar power capacity had been added in the country between January and August. The figure dwarfed the figure from the same period last year, which stood at 44.47GW.

Major Chinese solar power companies invested a combined 187.3 billion yuan ($25.6 billion) in power-generation projects over the same period, an 82.7% increase year-on-year, according to the NEA.

Why it matters: The impressive growth for solar is partially driven by the low cost of solar panels, which spurred the fast expansion of centralized and distributed solar power stations, industry insiders told Caixin.

Centralized solar power stations refer to large-scale installations, usually situated in deserts or far-flung areas, while distributed solar power stations refers to small-scale power facilities closer to the end users, such as rooftop panels.

The same sources also pointed to state-run companies’ annual renewable energy targets as a factor for the huge growth. They said that these companies might have taken advantage of cheap solar panels to expand their internal renewable capacity.

Diplomacy: China’s vice president meets U.S. climate envoy

What’s new: Vice President Han Zheng met with U.S. Special Presidential Envoy for Climate John Kerry on Sept. 19 on the sidelines of the 78th U.N. General Assembly in New York, according to statements released by China’s Ministry of Foreign Affairs and the U.S. Department of State.

Han stated that China has always been a “staunch practitioner” in addressing climate change and that the country is firmly committed in working toward the “dual-carbon” targets of peaking carbon emissions before 2030 and achieving carbon neutrality before 2060, according to the statement from the Chinese side.

Han and Kerry discussed the “critical importance of bilateral and multilateral efforts” to tackle climate change, the U.S. statement said. Kerry urged China to “raise ambition” in efforts to accelerate decarbonization and reduce emissions of “super pollutants” like methane, it added.

Why it matters: Climate change has been widely considered as one of the few areas where cooperation between China and the U.S. can happen amid rising tensions between the two countries. China is currently the world’s largest greenhouse gas emitter, while the U.S. has historically been the largest.

Han and Kerry’s meeting occurred just two months before COP 28, the U.N.’s 28th Conference of the Parties on Climate Change which will run in Dubai from Nov. 30 to Dec. 12, raising hopes that China and the U.S. could work with each other at the conference to push for stronger outcomes.

The two countries last teamed up at COP two years ago in Glasgow by releasing the Glasgow Declaration. Many experts believed at the time the document could speed up the China-U.S. climate cooperation and, by extension, the world’s efforts to reach net zero.

Transport: Proportion of new-energy buses in China reaches 77%

What’s new: More than three-quarters of public buses in China are powered by renewable energy, CCTV reported on Sept. 19.

Out of the more than 703,000 buses on China’s roads, more than 540,000 of them are new-energy vehicles, accounting for 77% of the total, the state-run broadcaster said.

Why it matters: The adoption of electric buses is an “important link” in China’s efforts to save energy, reduce emissions and fast-track the development of a green public transport system, Wu Songquan, chief specialist at the China Automotive Technology and Research Center, told Xinhua previously.

China aims to establish a “basic” green public transport system by 2025. Apart from buses, the country is pushing for electrification of all vehicles in the public sector, according to a notice released by eight government agencies earlier this year.

Luo Guoping contributed to reporting.