To reach the goals of decarbonisation in China and in Europe, electrification of the energy system is vital. The cost of renewable energy production has decreased substantially, and the direct use of electricity will be the energy solution in most sectors. ‘Hard to abate’ sectors like heavy transport, aviation and industries (e.g. cement, steel, refineries) will need green gases/ liquids based on renewable electricity production.
Before the liberalisation of the electricity market in Europe, each country had a national long- term plan for production and grids based on cost optimisation, taxes on borders to prevent exchange, a central dispatch and no markets. The price of electricity was often decided in national parliaments. It often ended up in huge over-capacity both in production and transmission. In such a system the costs for a green transition would be unacceptable to many countries in Europe.
The market reforms in the EU are based on a comprehensive regulatory framework which provides the basis for the energy transition. The transition needs to be affordable for ordinary people, while security of supply – short term and long term – is vital. In this context, grid planning and market development is crucial, and both infrastructure and markets need to succeed.
The EU-China Energy Cooperation Platform (ECECP) is a basis for exchanging best practice on the regulatory set up and on how to set up institutions. The exchange of models for grid planning and market development is key. I have been fortunate to be able to follow this successful project from the start.
This report is titled ENTSO-E Grid Planning Modelling Showcase for China. Can the EU’s Grid Model be of use in China and what are the key learnings?
The project draws on existing scenarios and modelling frameworks for China and Europe, with an emphasis on Cost Benefit Analysis in the grid planning processes. This shows the critical linkage between grid planning and power market reform. A key feature of the methodology is the recognition, from the transmission grid planning perspective, that the market will determine the use of the grid.
Europe’s ENTSO-E methodology uses a coordinated and comprehensive transmission grid planning approach, which includes development of scenarios, screening of potential new transmission assets, and combined CBA. The aim is to ensure system reliability, guarantee power supply and integrate more renewable energy at the lowest possible cost. Comparing current Chinese grid planning approach with the ENTSO-E approach shows potential room for improved efficiency in China’s grid planning.
Model results indicate that a market-based approach, where transmission expansion is market led, could achieve significant CO2 emission reductions in China’s power system. The reduction can be achieved because transmission expansion will allow higher amounts of renewables to be generated and transported to consumers, thereby displacing coal-fired power generation. Our experience in Europe is that our model works. I hope this project report will inspire others to follow suit!
For its part, Europe has a lot to learn from China’s experiences. I am glad to hear that the ECECP will continue to offer the opportunity to exchange best practice. Cooperation is certainly the way forward!!
Bente Hagem
Former chair of the Board of ENTSO-E and
former executive Vice President of Statnett SF
Oct 20, 2021
Both Europe and China are facing a critical moment in the transition to clean energy. The Chinese government recently issued the ‘Working guidance for carbon dioxide peaking and carbon neutrality in full and faithful implementation of the new development philosophy’ (hereafter the ‘Guidance’), which clearly sets out phased targets for 2025, 2030 and 2060, and puts forward specific requirements for industries, including the energy sector. The EU’s recent ‘Fit for 55’ package, which builds on the 2019 Clean Energy for All Europeans Package, further raises the target for renewable energy’s share of the market. Market-oriented reform is an important step in energy transition, and the newly issued ‘Guidance’ puts forward specific requirements for energy system reform and market-oriented reform in the power sector. In the course of a review of China’s and Europe’s journey towards power market reform, many similarities between the two parties have been identified. The energy sectors in China and the EU are both working actively and steadily toward their established goals, while constantly optimising their practice and building on their accumulated experience.
In a Joint Statement on the Implementation of EU-China Energy Cooperation, the EU and China resolved to establish the EU-China Energy Cooperation Platform (ECECP) in 2019. Since its establishment in May 2019, ECECP has conducted a series of exchange activities and research projects covering various topics such as energy transition, power market reform, renewable energy development and grid planning methodologies. It is essential for the EU and China to continue and deepen this ongoing relationship.
This report, ‘ENTSO-E Grid Planning Modelling Showcase for China’, provides a detailed introduction to the European power grid planning modelling and research method. Taking China’s power grid conditions at 2020 as the starting point for reference, the report applies the ENTSO-E modelling method based on scenario building, and shows how the inter-provincial power flow and transmission line development can be synthetically optimised. By applying simulated market prices into the method, the transmission scheme with the lowest overall system cost is screened out, and several transmission projects are selected as cases for detailed cost-benefit analysis (CBA).
In 2010, soon after the enactment and implementation of the Third Energy Package of the European Union in 2009, ENTSO-E started to devise a ten year network development plan (TYNDP) for the European power grid, which is updated every two years in order to ensure it always keeps up with the rapid development of renewable energy. The TYNDP caters for the needs of the electricity market and provides detailed guidance for the development of the European power grid.
Prepared by Chinese specialists, Chapter 3 of this report introduces the process and methods of Chinese power sector development planning (including power grid planning). The planning cycle for the development of China’s power system is generally five years. It focuses on the next 10 to 15 years for forecast analysis in order to optimise the future arrangement of power supply and the efficiency of inter-provincial power transmission. Through repeated demonstrations, economically viable cross-regional and inter-provincial transmission schemes are thus identified.
Through participating in this project, experts from both Europe and China have gained an in- depth understanding of each other’s power grid planning methods. Although the methods are different, the objectives for grid planning are basically the same, only with different focuses in certain steps. Chinese experts have reaped no little benefit from their participation in the research team working on this project.
Looking forward, renewable energy will see rapid development in order to meet energy transition targets. Yet this leaves many issues that require further study and analysis. I genuinely hope that experts from the EU and China will be able to work together to continue this work towards energy cooperation and exchanges..
Yang Kun
Executive President of China Electricity Council
October 29, 2021
This report was prepared by:
Peter Børre Eriksen, Lars Møllenbach Bregnbæk, Janos Hethey and Lars Pauli Bornak, Ea Energy Analyses Shi Jingli, Energy Research Institute of the NDRC (ERI)
Dai Hongcai, State Grid Energy Research Institute (SGERI)
Zhang Lin and Lei Xiaomeng, China Electricity Council (CEC)
with contributions and supports from the following researchers:
Han Xue and Hui Jingxuan, ERI
Zhang Ning, Jian Yongfang, and Li Jiangtao, SGERI Dong Bo, Li Yi, Ye Jing, and Wu Liqiang, CEC