Also by EU-China Energy Cooperation
Platform Project
2020
EU China Energy Magazine Spring Double Issue
EU-China Energy Magazine Summer Issue
中欧能源杂志夏季刊
EU-China Energy Magazine Autumn Issue
中欧能源杂志秋季刊
EU-China Energy Magazine 2020 Christmas Double Issue
中欧能源杂志2020圣诞节双期刊
2021
EU-China Energy Magazine 2021 Spring Double Issue
中欧能源杂志2021春季双期刊
EU-China Energy Magazine 2021 Summer Issue
中欧能源杂志2021夏季刊
EU China Energy Magazine 2021 Autumn Issue
中欧能源杂志2021秋季刊
EU China Energy Magazine 2021 Christmas Double Issue
中欧能源杂志2021圣诞节双刊
2022
EU China Energy Magazine 2022 February Issue
中欧能源杂志2022年2月刊
EU China Energy Magazine 2022 March Issue
中欧能源杂志2022年3月刊
EU China Energy Magazine 2022 April Issue
Joint Statement Report Series
Electricity Markets and Systems in the EU and China: Towards Better
Integration of Clean Energy Sources
中欧能源系统整合间歇性可再生能源 - 政策考量
Supporting the Construction of Renewable Generation in EU and China:
Policy Considerations
中欧电力市场和电力系统 - 更好地整合清洁能源资源
支持中欧可再生能源发电建设: 政策考量
ENTSO-E Grid Planning Modelling Showcase for China
ENTSO-E 电网规划模型中国演示
Integration of Variable Renewables in the Energy System of the EU and
China: Policy Considerations
Table of Contents
Letter from the Team Leader
1. Consumer participation in energy markets – P2P electricity markets
in China and the EU
2. Energy efficiency solutions from EU that could help meet China’s
‘Dual Carbon’ Goals
3. The Renaissance of Aquifer Thermal Energy Storage in China
4. Using electrostatic repulsion to clean Solar panels, avoiding up to
30% power loss
5. Accelerating transitions to zero carbon
6. Hydrogen Industry reaches a crossroads
7. News in Brief
8. Reports Recommendation
Letter from the Team Leader
Welcome to the April 2022 issue of the EU China Energy Magazine.
On 31 March 2022, EU Commissioner for Energy Kadri SIMSON and
Administrator ZHANG Jianhua of the China National Energy
Administration (NEA) held the 10th EU-China Energy Dialogue online to
exchange views on current issues and discuss the status of the
implementation of the ‘Joint Statement on the Implementation of EU-China
Energy Cooperation’.
In this issue, we focus on how EU-China energy cooperation can contribute
to the global energy transition. We look at how consumers participate in
energy markets via P2P electricity markets in China and the EU; how
energy efficiency solutions from the EU are standing ready to contribute
more to China’s ‘Dual Carbon’ Goals, and finally, we look at the prospects
for aquifer thermal energy storage (ATES) technology, a sustainable heating
and cooling technology that originated in China and has been
commercialised in the Netherlands.
We hope you will find them interesting and look forward to hearing your
feedback!
Best regards,
Flora Kan
Team Leader
ECECP
1. Consumer participation in energy
markets – P2P electricity markets in
China and the EU
System flexibility is the key to overcoming challenges in the energy system
by integrating more variable renewable energy resources, maintains the
EU-China Joint Statement Report ‘Integration of variable renewables in the
energy system of the EU and China’. The authors urge more discussion
about the evolving role of distribution networks and local energy markets.
[1] ECECP Junior Postgraduate Fellow Helena Uhde, who is conducting
research on peer-to-peer (P2P) electricity markets, gives an insight into
status, regulation and implementation of the concept in China and the EU.
With the EU's announcement that it is to become a climate-neutral continent
by 2050, as well as President Xi Jinping's aim for China to be carbon
neutral by 2060, both economies have set ambitious climate targets that can
only be achieved with a radical energy transition. According to scenario
analyses by the IEA, China needs to increase the share of renewable energy
sources in the total electricity generation mix from about 25% in 2020 to
40% in 2030 and 80% in 2060 if it is to achieve its carbon neutrality target.
[2] Photovoltaics alone are expected to cover almost 45% of the electricity
generation mix in 2060, compared to 4% in 2020. The EU is even more
ambitious, announcing that it will raise its current renewables target from
32% to at least 40% of the EU's total energy mix by 2030.[3] Integration of
these renewables will require fundamental changes to the current energy
paradigms.
The timeline and socio-technical structure of the power systems in China
and the EU may differ, but common challenges are becoming apparent as
the proportion of renewable energy resources rises. A fundamental
challenge is the need for close to real-time, local signals on supply and
demand to balance the system and maintain system reliability. A more
active demand side is also needed to enable the necessary flexibility, for
example in the form of ancillary markets and demand-response
mechanisms.
One instrument for increasing flexibility is to expose the demand side of the
electricity system to changing market prices, e.g., through so-called 'peer-
to-peer electricity markets'. In these, often locally constrained markets,
consumers and small-scale generators can trade electricity with each other
as equal 'peers'. Other energy commodities, such as heat, cooling, and
flexibility, can also be traded in P2P markets. These electricity markets
enable consumers to participate actively in the market while creating new
business models for small-scale electricity generators. P2P electricity
markets are often designed with two layers: a physical layer for
transmission and a virtual layer for electricity trading, as depicted in Figure
1.
Figure 1: Simplified depiction of a P2P electricity market. Vectors designed
by Freepik.
Energy Communities as the starting point for P2P
markets in the EU
Unlike wholesale electricity markets, an important aspect of P2P markets is
that consumers become market participants. With its 2019 Clean Energy
Package for All Europeans, the EU introduced the legislative concept of
‘energy communities’, which defines the rights of consumers to participate
in energy markets individually or as a community through generation,
consumption, transfer or sale.[4] Two documents in the package are of
particular importance: the revised Renewable Energy Directive [(EU)
2018/2001] and the revised Internal Electricity Market Directive [(EU)
2019/944]. The Renewable Energy Directive defines the role of renewable
energy self-consumers and renewable energy communities and focuses on
renewable energy. It further specifies that this role can be fulfilled by means
of ‘renewables power purchase agreements, electricity suppliers and peer-
to-peer trading arrangements’, among others. The document stresses that
renewable energy self-consumers and communities must not be placed at a
disadvantage compared to large market players. The Internal Electricity
Market Directive puts the emphasis on electricity, encouraging market
participation either by individuals or citizen energy communities. These can
provide flexibility services through demand response and storage. Now that
the directives have been jointly adopted by the EU Parliament and Council,
the EU Member States are obliged to incorporate the directives into their
national legislation.
Table 1: Key policies for P2P electricity markets in the EU.
Based on: Uhde (2022).
Implementation in the EU
There are many research and pilot projects relating to P2P electricity
markets in the EU, although the exact number is difficult to establish, as
they include not only EU-funded pilot projects, but also private initiatives.
Under the European Commission initiative BRIDGE, Horizon 2020 funded
projects in the area of smart grid, energy storage, energy islands and
digitalisation are documented to foster an exchange of information between
projects and develop best practice. A total of 90 projects (58 ongoing) are
included in this initiative, only some of which are P2P electricity market
projects. The BRIDGE 2021 brochure, which provides a comprehensive
overview of the projects, deserves special mention.[5]
On 20 April 2022, the Energy Communities Repository was launched.[6]
The project will support energy communities in the EU for 24 months and
gather best practices. The repository will be implemented by a consortium
consisting of Energy Cities, REScoop and FEDARENE. The Horizon 2020
project COME RES, for example, is supporting the development and testing
of new business models for renewable energy cooperatives in nine EU
Member States. As can be seen, the EU’s focus is on promoting citizens'
initiatives, of which P2P electricity markets are only one of many
possibilities for community energy management. Different business models
and market mechanisms are being tested in local communities.
Case study 1: The Landau Microgrid Project in Germany
One of the first implementations of a local P2P electricity market in
Germany is the Landau Microgrid Project (LAMP), implemented by the
Karlsruhe Institute of Technology (KIT) in cooperation with Energie
Südwest AG, a local energy supplier, and software developer Selfbits
GmbH.[7] In the pilot project, 20 households located in the Lazarettgarten in
Landau, a city in south-west Germany, are enabled to trade locally
generated renewable electricity among themselves. Trading on the platform
takes place via automated software agents, in line with the participants'
price preferences. Participants gain insight into their electricity
consumption and generation data, collected through blockchain-enabled
smart meters and transmitted via mobile app. Market participants are
provided with a smart meter and a mobile device so that they can use the
app free of charge. If P2P market prices fall below the actual electricity
tariff, market participants receive a credit on their electricity costs reflecting
the savings made. If the P2P market prices rises higher than their actual
electricity tariff, the energy supplier Energie Südwest AG covers the
additional costs.[8] The pilot project is an experiment that replicates the free
market but builds in financial safeguards. However, it is worth noting that if
exposed to the risk of actually losing money, the behaviour of market
participants may well deviate from that observed in the pilot.
Figure 2: Landau Microgrid Project. Based on Mengelkamp (2019).
Market-based trading of distributed energy in
China
While the term ‘P2P electricity markets’ is not used explicitly in Chinese
regulations, policies issued by the National Energy Agency (NEA) and the
National Development and Reform Commission (NDRC) between 2016
and 2019 reflect the concept.[9] An overview of the policies is given in
Table 2. The first phase of policies (2016-2017) focused on market-based
trading under the concept of the ‘energy internet’, i.e., the interconnection
of the energy sector with the Internet, and the second phase of policies
(2017-2019) focused on market-based integration of distributed energy
resources. In the ‘Outline of the pilot program for distributed electricity
generation market trading’, issued by NEA in 2017, three mechanisms for
the exchange of distributed energy were announced: direct trading,
entrusted sales, and sales to grid. While the second option leaves it up to the
grid operator to trade the electricity on behalf of the distributed energy
generator and the third option basically represents selling electricity into the
grid at a fixed tariff, the first ‘direct trading’ option leaves room for the
design of different P2P market mechanisms. Distributed multi-bilateral
trading is thus an option, in addition to a centrally controlled auction.
Table 2: Key policies for P2P electricity markets in China.
Based on: Uhde & Malima (2020) and Uhde (2022).
Implementation in China
In 2019, NDRC announced a list of 26 market pilots for distributed energy.
The pilot projects are mainly located in provinces with a large share of
distributed energy capacity, and about half of the pilot projects are located
in ‘economic and technological development zones’ or industrial parks.[10]
Apart from the breakdown of the energy mix in the market, not much
information is available on the pilot projects.
Case study 2: Hebi Distributed Trading Pilot (
鹤壁分布式交易试点
)
Figure 3: Electricity grid of Baoshan Industrial Park.
北控清洁能源集团
(2019).
One of the 26 selected pilot projects is the Hebi Distributed Trading Project
in the Baoshan Industrial Park in Hebi, Henan Province.[11] The pilot
project for market-based trading of distributed generation has been
implemented by Beikong Clean Energy Group. By 2020, a total capacity of
220 MW of distributed energy capacity was planned, including 70 MW of
distributed photovoltaic power plants, 150 MW of distributed wind farms
and 30 MWh of supporting energy storage. Trading on the platform was to
be carried out using the ‘direct trading’ method. Transaction settlement was
to take place via the provincial electricity trading platform.
In this project, the market participants are distributed energy generators
(sellers), and nearby electricity consumers (buyers). The solar and wind
energy systems are distributed over a relatively large geographical area, on
15 pieces of previously unused land. The grid company controls the power
flow and receives a wheeling fee for distributing the electricity generated.
Unlike the European P2P electricity markets, which are centred around
residential consumers, the consumers here are chemical and cement
companies located in the industrial park.[12] One could argue that this
project should be called a business-to-business (B2B) market rather than a
P2P market. Against this, however, it is worth bearing in mind that
electricity trading is not the core business of the industrial consumers taking
part.
Barriers to implementation in China
Apart from the 26 pilot projects that have been announced, start-ups are
struggling to implement the concept in practice. One Chinese company with
a lot of potential was Energo Labs, a Shanghai-based startup largely
focused on south-east Asia that built blockchain-based platforms for P2P,
machine-to-machine, and vehicle-to-microgrid trading. One of the
company’s projects was the De La Salle University campus microgrid
project in Manila, Philippines.[13] In this blockchain-based P2P electricity
market project, electricity was traded between university buildings.
However, due to the small number of market participants (two buildings),
trading was not particularly effective. Today, the Energo Labs website is no
longer accessible, social media accounts have not been updated since 2018
and there are no reports on new projects. A former employee tells us that
projects in China only reached the planning stages, but did not get as far as
implementation. ‘First, there is a lack of regulations for new models.
Current regulations cannot keep up with and may even hinder the use of
new technologies such as AI, blockchain, behind-the-meter energy
balancing, etc. Secondly, the regulatory environment is extremely complex.
In order to get approvals for pilot projects or the introduction of new
technologies and business models, many hurdles have to be overcome.’
Besides regulatory barriers, finding an economically feasible business
model for P2P electricity markets in China is also difficult. Electricity is
heavily subsidised, resulting in very low tariffs for private consumers.
Moreover, the density of high-rise buildings in cities leaves hardly any
space for renewable installations. One feasible application area could be
the trading of renewable energy between commercial and industrial
consumers in industrial parks. As reports of the initial phase of China’s
green power trading pilot have shown, companies were willing to pay a
premium of 8%-13% over the price of coal power for green electricity.[14]
This could be of interest, for example, to multinational companies that want
to decarbonise their supply chain. There may be other services for which
consumers would be willing to pay more. For example, P2P electricity
markets may be able to ensure energy reliability for particularly critical
processes or priority charging for electric vehicles. Creativity is needed to
find the right target group and a suitable business model for P2P electricity
markets in China.
Outlook
P2P electricity markets are a means of consumer empowerment, local
integration of distributed energy resources and creation of flexibility via
time-varying electricity prices. These concepts are being tested and new
business models developed in pilot projects around the world. However, are
P2P electricity markets the model of the future for organising electricity
distribution at a local level? So far, the scale-up of P2P electricity markets
has been difficult due to regulatory barriers and the market power of
utilities and grid operators. Local balancing still poses difficulties, and
questions of coordination between network operators and P2P market
project developers also need to be clarified. Additionally, although
decentralised organisation lowers the risk in many areas, if new
infrastructure is being built, the risk for investors increases: market
participants need to see the merits of the idea in the first place, and then
stick with it in the long term. The future will show whether the P2P
electricity markets model will prevail when the pilot projects are over.
By Helena Uhde
Junior Postgraduate Fellow at ECECP
PhD Candidate at Beijing Institute of Technology
2. Energy efficiency solutions from EU
that could help meet China’s ‘Dual
Carbon’ Goals
Danfoss shares its experience in two high profile innovative energy
efficiency projects: how Facebook’s data centre provided heat to 12 000
homes, and how Marselisborg wastewater treatment plant became a net
energy producer. These projects show that there is scope for a significant
impact on global emissions when the EU and Chinese economies
collaborate, argues Alfred Che, vice president of Danfoss China.
In recent years, China has focused more and more on the benefits that
efficiency solutions could deliver in order to achieve the country’s carbon
peak and neutrality goals. In practice, there are some quick wins with
readily available energy efficiency solutions from the EU that China could
leverage in such areas as data centre energy management, wastewater
facility energy management, and district energy.
Facebook’s hyperscale data centre warms Odense
Facebook Odense Data Centre
Source: Tech at Meta
Facebook’s Odense data center campus opened in September 2019 and
covers an area of 50 000 sq m. The site at Odense was selected because of
the possibility of waste heat recovery. Odense district heating system is
operated by Fjernvarme Fyn A/S, who helped Facebook design and build
the system.
The system circulates water from the district heating system into the Meta
campus, where it is routed to the roof and passed through the data centre
cooling units. The water picks up low-temperature heat and is channelled
back to the local heat pump facility, which then uses heat pumps to warm
the water further, making it hot enough for use in the district heating
system.
Source: Tech at Meta
The Odense data centre campus recovers and distributes 100 000 MWh of
energy annually from its servers — enough to heat 12 000 homes. This heat
is funnelled to a local hospital and thousands of other buildings in the
surrounding community.
This technology saves 80 000 MWh (2.88*10^14J, 9 827 tonnes standard
coal) each year, cutting CO2 emissions by 24 500 tonnes annually. It is a
major factor in the city’s plans to phase out coal-fired heating by 2025, five
years ahead of Denmark’s national target.
The innovative solution developed by Danfoss recovers heat from the data
sector using sector coupling. ‘Heat pumps are not new — they are a very
big part of the Danish heating strategy to phase out coal and natural gas —
and neither are coils to recover heat. It’s the pairing of these two at
hyperscale that is innovative,’ says Lauren Edelman, an official blogger for
‘Tech at Meta’ that covers all tech innovation at Meta, Facebook’s parent
company.
‘The International Energy Agency estimates that 1% of all global electricity
is used by data centres and that by 2025, data centres will consume one fifth
of the world’s power supply. The majority of the energy demand comes
from powering the servers, but they in turn produce heat and need to be
cooled. This cooling again requires a lot of energy and generates a lot of
excess heat – most of which is currently being let out into the surrounding
environment,’ explains the Danfoss website.