Insights Library

Browse TTP’s updates on the latest insights and analysis in chronological order below. 

Encouraging new participants to enter the power market to promote new power system development 

Chen Zongfa, Expert at China Electricity Council 

For electric power companies, there are three things to do to help develop a new power system and foster new quality productive forces: drive the modernization of traditional power industries, bolster the growth of emerging sectors, and nurture the industries of the future. In terms of market mechanisms, there should be a proactive yet prudent push for new participants to enter the market, ensuring the robust development of strategic industries. The rapid development of emerging market participants like pumped hydro energy storage, new energy storage solutions, and virtual power plants necessitates learning from both domestic and international experiences to refine market entry and trading mechanisms. This effort aims to facilitate a shift in the power system dynamics from a passive “generation meeting demand” model to a more interactive “generation–grid-load-storage” model. 

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Building a green data center requires ensuring a stable supply of green power 

Zhao Chuhong, Vice President of Envision Group

To build a green data center, two key aspects must be addressed. Firstly, on the supply side, examine the sources of electricity, either by using renewable energy or participating in green power trading and purchasing green electricity certificates; also, diversify and enhance the green energy supply and usage, continuously refining the supply structure. Secondly, on the demand side, the construction of a modern power system can leverage technologies like generation-grid-load-storage or microgrids to optimize energy consumption and enhance the stability of the power supply. 

Once renewable energy becomes the predominant source of power in our country, it’s crucial to address the inherent variability, intermittency, and unpredictability of new energy sources. The smooth operation of data centers depends on a reliable power supply. By utilizing microgrids, we can integrate various energy sources like wind and solar energy, and then employ digital technologies for effective energy management. 

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As China seeks to advance its electricity reform, it is crucial to shift focus to the user side

Zhao Kebin, former Senior Director of Power Construction, Datang Gansu Power Generation Co., Ltd

To deepen electricity reform, the most urgent task is to increase user participation in the market. The government has set the framework, and grid operators, generators, and power companies are already involved. However, many users remain at a disadvantage when it comes to shaping policy, understanding the market, and participating in trading. It is crucial that users become more proactive and participate more effectively, otherwise competition in the new energy market will simply become a zero-sum game involving only the power generation side.

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Highly sensitive to climate change, China is facing significant shifts in its climate system

Yuan Jashuang, Deputy Director of the National Climate Center

As a region highly sensitive to and significantly affected by climate change, China is facing significant shifts in its climate system in diverse aspects.

With global warming, higher emissions are expected to drive more frequent, severe, and dangerous extreme heat events. Over the next 30 years, China’s average maximum extreme temperature is projected to rise by 1.7 to 2.8°C, with the biggest increases occurring in the eastern regions and western Xinjiang. Additionally, the average number of regional heat wave days is likely to rise by 7 to 15 days. Under high-emission scenarios, these extreme heat events could become a regular occurrence, happening once every 1 to 2 years, compared to the current rate of once every 50 years.

In the future, the rate of extreme precipitation events in China is also expected to increase more than that of total precipitation, with greater variability and intensity, with greater variability and intensity. Over the next 30 years, five-day maximum precipitation is expected to generally increase nationwide, with more than a 10% rise in the eastern parts of Northwest China and the Huang-Huai River Basin.

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It is essential to refine the structure of green financing to solve the investment overheating in the PV and wind power sectors

Wang Yao, Director, International Institute of Green Finance, Central University of Finance and Economics

Currently, most funds raised through major financial tools such as green loans and green bonds are directed towards the clean energy industry and the green upgrade of infrastructure. In particular, the photovoltaics and wind power sectors have experienced issues with overheating and intense competition in green funds. It is essential to refine the structure of green financing to fully support projects in new energy, green transportation, green buildings, green manufacturing, and other fields. This will enhance the efficiency of fund and resource utilization.

Renewable energies such as wind and solar power are poised to become the primary sources of energy supply. There are also significant investment opportunities in the development of complementary energy storage technologies such as battery storage and hydrogen energy. Furthermore, the new energy vehicle industry offers promising investment opportunities, with infrastructure development, such as charging stations, battery swapping stations, and hydrogen refueling stations, promoting rapid industry growth. Additionally, the green finance sector itself is poised to emerge as a key investment area, encompassing various aspects that will attract investor attention. As trading expands and the market diversifies, China’s carbon market is expected to provide clearer mechanisms for pricing carbon assets and cost transmission.

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The onset date of the first high temperature period in China is advancing with extreme and compound weather events

Wang Guofu, Director, Meteorological Disaster Risk Management Division, National Climate Center

The first high temperature period in North China and the Huang-Huai region (between the Yellow River and the Huai River) has arrived earlier than usual this year. Based on the current assessment of meteorological disaster risks, by July 14 China will face compound disasters such as high temperature combined with heavy rain, drought, etc., and this summer may still be extremely hot. The onset date of regional extreme hot days nationwide is advancing at a rate of about 2.5 days per decade. This year, it occurred four days earlier than normal.

Due to climate change, atmospheric circulation has become more complex, increasing the frequency and intensity of extreme weather events. Globally, multiple disasters are overlapping to create compound events, such as high temperature with drought and low temperature with freezing, showing the characteristics of complexity, large-scale impact, and long-term consequences.

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Promote China’s energy conservation and carbon reduction efforts by cost constraint and price transmission mechanisms

Ren Daming, researcher at  Zero Carbon Research Institute, Beijing News

In the current economic environment, efforts to conserve energy and reduce carbon emissions should be made with a focus on minimizing economic costs while not disrupting regular industrial operations and economic progress. This requires the establishment of appropriate cost constraint and price transmission mechanisms.

To begin with, there is an urgent need to rapidly integrate the steel, petrochemical, non-ferrous metal and construction materials sectors into the national carbon market. Through market-based means, the imposition of carbon emission costs on energy-intensive industries would incentivize companies to accelerate their equipment upgrades or transition to more sustainable energy sources, thereby advancing the energy conservation and carbon reduction agenda. It is also necessary to change the energy consumption patterns of such enterprises through power pricing strategies, such as refining the pricing mechanism in the electricity market, eliminating price advantages for high-energy-consuming industries, and implementing time-of-use electricity pricing policies.

In addition, it is important to ensure a seamless price transmission mechanism between the production and consumption sectors so that changes in electricity and carbon prices can influence consumer behavior. For example, the carbon compliance costs paid by electricity companies covered by the national carbon market cannot currently be passed on to end users. This distorts price signals in the electricity market and disincentivizes users from actively participating in energy efficiency and carbon reduction.  

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Chinese automakers need to globalize their brands to better explore foreign markets and mitigate trade risks 

Liu Daizong, East Asia Director, Institute for Transportation & Development Policy 

In the face of global trade tensions, Chinese automakers need to transform their brands into global ones to better navigate foreign markets. They should embrace the concept of “win-win”, fostering cooperation with local partners to increase mutual prosperity. Strategies such as setting up local factories or forming joint ventures can help mitigate trade risks and unearth new growth prospects. A better understanding of Europe’s focus on (reducing) carbon emissions in the transport sector is also crucial, so that companies can offer products that meet these targets. For example, European initiatives for carbon neutrality in transport prioritize compact electric vehicles over SUVs.   

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Enhancing energy self-sufficiency in China’s central and eastern regions is both essential and achievable for optimizing the energy structure 

Du Xiangwan, Academician, Chinese Academy of Engineering

When it comes to optimizing the energy structure, for many years, we have always stressed the need to promote both energy conservation and energy efficiency through efforts on both the supply and consumption sides. In my view, it’s necessary to significantly adjust the energy supply structure to progressively increase the energy self-sufficiency level in the central and eastern regions.   

To be precise, the aim is to effectively utilize the abundant renewable energy resources in the central and eastern regions. Prioritize the use of local renewable resources to boost self-sufficiency, supplemented by long-distance power transmission where local supply falls short.  

From an economic viability standpoint, scientific analysis shows that generating electricity locally in the Central and East is more cost-effective per unit compared to importing electricity from the West.  

However, for high-load centers like Shanghai, a blanket pursuit of self-sufficiency is not advisable; imported electricity plays a crucial role, underscoring the need for tailored strategies based on specific regional conditions. 

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Policy tools like China’s Green Electricity Certificate (GEC) shouldn’t be excluded in EU carbon footprint calculations on EV batteries

Zheng Ying, Vice President of Sunwoda Electronic Co 

China’s Green Electricity Certificate (GEC) is more than just an important policy tool. Looking at the global practice, the EU also uses energy attribute certificates such as Guarantee of Origin to promote the development and integration of renewable energy. According to the adjustment in the EU’s new draft on the methodology for calculating the carbon footprint of electric vehicle batteries, some tools that support the energy transition, such as GECs, won’t be counted in the calculation. This will disregard companies’ efforts to promote the deployment and development of renewable energy, which may reduce their motivation to source renewable energy. In addition, Chinese companies would face more significant consequences than their EU counterparts if the GEC were not adopted. It is preferable to give the market the authority to use such instruments rather than bluntly rejecting companies’ efforts to drive the energy transition.   

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