How Far Can the Direct Supply Model for Green Electricity Go in an Integrated Network? (AI Translation)

【周刊提前读】“源网荷储一体化”的绿电直供模式能走多远？

In late June, a 1-gigawatt photovoltaic power station in Urumqi, Xinjiang, was completed and is awaiting grid connection [para. 1][para. 2]. With a 4-billion-yuan investment from National Energy Group Urumqi Photovoltaic Power Generation Co., it aimed to join the Urumqi Ganquanbao incremental distribution network to supply green energy directly [para. 2]. However, the grid company objected, demanding direct connection to the main grid, resulting in an uncertain future for the project [para. 2].

This integration concerns Hoshine Silicon Industry, whose early investment conditions include sourcing 85% of its power from green electricity [para. 3]. Connecting to the incremental distribution network would meet 30% of their electricity needs at a lower cost [para. 4].

In 2023, Xinjiang saw unprecedented growth in renewable energy, with 22.51 million kilowatts of new installations, far exceeding previous years [para. 5]. However, the issue of energy absorption persists, as renewable energy comprised over 43% of installed capacity yet only contributed 16.4% of total power generation due to integration challenges [para. 6].

China faces similar nationwide issues, where renewable energy installations are rising, but grid limitations lead to significant waste [para. 8]. Many local governments are pivoting towards integrated source-grid-load-storage projects to attract investment and improve local economies post-pandemic [para. 13][para. 14]. By 2023, regions like Inner Mongolia, Xinjiang, and others have introduced pilot plans for these integrations [para. 15].

The central government supports this transition. Policies since 2021 have focused on integrating renewable energy within industrial zones and promoting green direct power supply [para. 16][para. 17]. This aligns with China's dual carbon goals for 2030 and 2060, emphasizing the need for businesses to reduce emissions [para. 18]. The direct supply of green electricity meets international standards and avoids additional costs like those for green certification in Europe [para. 19].

Despite promising economic and environmental benefits, integrated projects face resistance from major power grids due to revenue and monopoly concerns [para. 20][para. 21]. The shift to integrated systems disrupts the traditional "uniform purchase and sale" model, a practice of China's large grids since 2002 [para. 31][para. 32].

The allure of direct green power is significant for industries, offering substantial cost savings. Projects like Sinopec’s Kuqa green hydrogen project demonstrate the feasibility and benefits of this integration [para. 22][para. 23]. Hoshine Silicon’s potential savings underscore the financial advantages, vital amid declining polysilicon prices [para. 34][para. 28].

Pilot programs in regions like Henan and Inner Mongolia illustrate varied approaches and the need for clear local guidelines to facilitate green electricity projects [para. 38][para. 39]. Success in these pilots heavily relies on local government support. Henan, for example, aligns its energy policies to reduce costs and attract investments [para. 45][para. 38]. Jilin has ambitious goals to leverage green electricity for industrial revitalization [para. 42].

The Xinjiang Ganquanbao project symbolizes a broader struggle: balancing the integration of renewable energy with traditional grid concerns. Major grids argue that integrated projects still rely on them for backup, imposing additional costs on other users [para. 53][para. 55]. They also resist losing transmission fees, as seen in Henan, where direct supply could reduce these fees substantially [para. 58].

Advocates for reforms believe that source-grid-load-storage integrations can offer diverse market participation and alleviate grid monopolies [para. 66]. Successful integration demands adjustments in pricing models and the separation of grid and distribution services [para. 91]. The evolution of these pilots could redefine electricity distribution, emphasizing market-driven solutions and smart grid technology [para. 93][para. 95]. The future of integrated renewable systems hinges on resolving these economic and structural challenges, ensuring fair distribution of costs and gains among all stakeholders involved.