Focus on promoting the construction of a batch of supporting power grid projects, appropriately relax new energy utilization rate targets, and refrain from restricting cross-provincial new energy trading... Recently, the National Energy Administration issued the "Notice on Doing a Good Job in New Energy Consumption and Ensuring High-Quality Development of New Energy" (hereinafter referred to as the "Notice"), proposing 17 measures aimed at enhancing the power system's capacity to absorb new energy.

　　Electric energy must be "generated and used immediately." In the power system, after electricity is produced by power plants, it can be utilized through local use, storage and conversion, or transmission to other regions via the power grid—this is consumption. When there are bottlenecks in consumption, the situation of "electricity that cannot be fully used yet cannot be transmitted out" will arise, resulting in curtailment. New energy sources such as wind and solar power have the characteristics of randomness and volatility, and need to be coordinated with energy storage and regional microgrids to orderly enhance consumption capacity.

　　Multiple industry experts stated that the "Notice" is of great significance for improving the management mechanism of new energy utilization rates and accelerating the construction of a new-type power system and new energy system. Some experts also suggested that promoting new energy consumption requires further deepening the reform of electricity pricing mechanisms.

　　Appropriately Relaxing the Lower Limit of New Energy Utilization Rate Targets

　　When discussing new energy consumption, one cannot fail to mention the new energy utilization rate.

　　In response to the severe wind and solar curtailment during the "13th Five-Year Plan" period, in 2018, the National Development and Reform Commission and the National Energy Administration proposed in the "Clean Energy Consumption Action Plan (2018-2020)" that by 2020, the national average utilization rate of wind power and photovoltaic power should reach 95%. Thereafter, the "95% consumption red line" gradually evolved into the default standard for assessing new energy utilization rates in the industry.

　　In recent years, China's new energy development has accelerated. As of the end of April this year, the cumulative installed capacity of wind power and photovoltaic power nationwide exceeded 1.1 billion kilowatts, a year-on-year increase of approximately 38%. However, according to statistics from the National New Energy Consumption Monitoring and Early Warning Center, in the first four months of 2024, the new energy utilization rates in Gansu, Qinghai, Tibet and other places had repeatedly fallen below 95%; among them, the photovoltaic utilization rate in the Tibet Autonomous Region from January to April was only 71.8%.

　　"During the '15th Five-Year Plan' period, China's total installed capacity of new energy will continue to grow substantially." Zhang Yiguo, Chief Planner of the China Renewable Energy Engineering Institute, predicted that the rapid development of new energy will once again face consumption problems.

　　Against this background, after the "2024-2025 Energy Conservation and Carbon Reduction Action Plan" proposed relaxing the new energy utilization rate to 90% in regions with better resources, the "Notice" also clarified requirements such as "scientifically determining new energy utilization rate targets for each region" and "some regions with better resource conditions may appropriately relax new energy utilization rate targets, in principle not lower than 90%."

　　"In the short term, relaxing the lower limit of utilization rate targets will cause some new energy power generation projects to lose some generation hours, leading to decreased revenues; but in the long term, the above changes will help stabilize the market and guide new energy investment to become more rational." said Cai Yuanji, Deputy Director of the Electricity Market and Carbon Market Research Institute of the Sichuan Energy Internet Research Institute, Tsinghua University. This policy can make new energy investment entities think more calmly about their investment and operational behavior, avoiding further clustered investment in areas where the utilization rate has already reached the red line.

　　At the same time, in the view of multiple interviewed experts, appropriately relaxing utilization rate targets also leaves more room for new energy development. Zhang Yiguo mentioned a set of data: currently, the total cost consumed per kilowatt-hour of new energy electricity generated has generally dropped to around 0.3 yuan, and in some regions even below 0.2 yuan. If still considered at a 100% utilization rate, to utilize 1 kilowatt-hour of new energy electricity, 0.5 yuan of energy storage cost would need to be spent, which is economically unreasonable. "Appropriately lowering the utilization rate indicator can promote a more abundant supply of new energy."

　　"This provision, under the premise of meeting the optimal rate of return and the lowest cost to society as a whole, allows regions and projects with good resource conditions to moderately curtail electricity in order to increase development scale. At the same time, considering reality, the new energy utilization rate target has not been completely liberalized." Zhang Yiguo believes that the above adjustment lays a policy foundation for achieving carbon peak targets and the healthy development of the new energy industry.

Strengthening Grid-Source Coordinated Construction to Enable Smoother Grid Connection of New Energy

　　"New energy connected to the grid for power generation is the most reliable profit model for power generation enterprises investing in new energy. However, the grid construction cycle is relatively long and does not match the progress of new energy project construction, often resulting in inconsistent coordination." In the view of Li Peng, Deputy Director of the Strategic Planning Department of the State Power Investment Corporation Limited, the coordination between China's new energy project construction and grid construction still needs improvement.

　　In this regard, the "Notice" proposed practical and feasible management methods in aspects such as strengthening planning, accelerating construction, and optimizing processes, including putting forward improvement requirements for the planning and management of supporting grid projects of 500 kV and above and below 500 kV respectively as well as distribution networks, and opening "green channels" for planning inclusion for key projects such as large-scale wind and photovoltaic bases and river basin hydro-wind-solar integrated bases laid out by the state.

　　"This is conducive to power generation enterprises reasonably arranging the pace of new energy project development and construction." Li Peng gave an example: considering that there are indeed situations where grid enterprises face construction difficulties or planning and construction timelines do not match, the "Notice" allows power generation enterprises to invest in and construct new energy supporting transmission projects, which are then repurchased by grid enterprises. "These measures directly address the practical problems faced by power generation enterprises and are highly targeted and operable."

　　At the same time, the "Notice" clarifies that "provincial energy authorities shall, in light of consumption capacity, scientifically arrange the development layout, commissioning timeline, and consumption direction of centralized new energy." This made Cai Yuanji, who has long been engaged in energy and electricity market research, feel the state's determination to control new energy projects.

　　Cai Yuanji told reporters that previously, governments in some regions did not fully consider local power transmission and consumption capacity and blindly launched new energy projects, resulting in problems such as projects being unable to connect to the grid for normal power generation, or being connected but unstable, leading to wasted capacity. "New energy projects such as wind and solar power should be built quickly, but not in a disorderly manner. The national or provincial level should further strengthen overall planning and control of new energy projects."

　　In addition to emphasizing grid-source coordinated development, the "Notice" also made arrangements for the system regulation capacity of the power grid, including conducting demand analysis for power system regulation capacity and clarifying new additions such as flexible transformation of coal power and pumped storage. Cai Yuanji believes that not only the power grid, but the entire power system must strengthen the construction of comprehensive regulation capacity from multiple dimensions such as the power source side, grid side, load side, and energy storage side (also known as "source-grid-load-storage").

　　"The improvement of system regulation capacity on the 'source' and 'load' sides deserves attention." Cai Yuanji said that on the one hand, attention should be paid to how to make the mandatory energy storage equipped on the power source side play its role; on the other hand, new concepts on the load side such as virtual power plants, vehicle-grid interaction, and wall-crossing electricity sales have brought new directions for new energy consumption.

　　"Flexible regulation capacity is an external factor for new energy consumption." Li Peng also emphasized that power generation enterprises should proactively improve the grid-connection performance of new energy, reducing the safety margin that dispatch centers must reserve through better power forecasting and more flexible energy regulation performance, thereby increasing the consumption rate.

Electricity Marketization Mechanism Is Key

　　The electricity marketization reform is considered key to new energy consumption.

　　In terms of fully leveraging the electricity market mechanism, the "Notice" also made a series of provisions, including optimizing intra-provincial and inter-provincial electricity trading mechanisms and exploring fair and orderly participation of distributed new energy in market trading through aggregation and agency. In terms of specific measures, "according to contract agreements, the power transmitting party is allowed to complete the power transmission plan by purchasing new energy electricity from the receiving province during periods when the electricity price in the receiving province is lower"—this is the most breakthrough requirement regarding electricity marketization reform in the "Notice."

　　"The above policy has opened a gap in the regulation of cross-provincial power transmission plans." Lin Boqiang, Dean of the China Institute for Studies in Energy Policy at Xiamen University, explained to reporters with an example: if Fujian signs a contract to transmit power to Shandong, and during a certain period the market electricity price in Fujian is higher than that in Shandong, indicating that Fujian's electricity consumption situation is relatively "tight," Fujian can choose to purchase contracted electricity from Shandong at a lower price to fulfill the transmission plan. "In this way, Fujian retains its self-generated electricity within the province, while Shandong, due to less incoming external electricity, leaves room for new energy consumption, and the supply-demand situation of both sides is optimized."

　　According to the requirements of the "Guiding Opinions on Accelerating the Construction of a National Unified Electricity Market System," by 2030, a national unified electricity market system will be basically established. However, at present, limited by factors such as the sharing of responsibility for regulating new energy transmission, revenues of local power generation enterprises, and taxation and employment, the progress of flexible cross-provincial new energy transmission is still relatively slow.

　　Lin Boqiang stated that the inter-provincial trading mechanism has cleared policy bottlenecks and can enable the market mechanism to better empower new energy consumption. It is understood that in China's northwest region, inter-provincial electricity market construction has already been carried out, and through the establishment of flexible trading mechanisms, the "smoothing effect" of new energy is fully utilized to promote consumption, but it has not yet been fully liberalized.

　　"By 2030, all of China's new energy electricity will enter the market." In Li Peng's view, by then, electricity market research will become one of the core competitiveness factors of power generation enterprises. "Future corporate profitability will depend not only on safe power generation but also on marketing. All types of entities operating automatically under the baton of the market—that is the ultimate means to solve new energy consumption."

　　Entering the market means competition. "Consumers like clean electricity, but they prefer stable electricity." Lin Boqiang pointed out that the instability of new energy makes its competitive advantage in the electricity market not obvious. Therefore, the core issue in promoting new energy consumption is building a safe and stable new-type power system.

　　However, in energy reform, it is difficult to fully satisfy the security, greenness, and economy of energy simultaneously. It is difficult for any type of energy to be both abundantly supplied, cheap, and clean and environmentally friendly. "A stable supply of new energy electricity will bring higher generation costs. How should this (referring to cost) be distributed among various stakeholders?" Lin Boqiang believes that in the long term, further deepening the reform of electricity pricing mechanisms is needed.