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China power shortages provide lessons for sector reforms in climate push

The ongoing power crisis in China provides key lessons for sector reforms to overhaul the electricity system, build a new grid based on renewables and decarbonization, and ensure stable energy transition amid shifting priorities, Chinese experts said at the launch event of International Energy Agency's report on a carbon neutrality roadmap for the country's energy sector.
The power rationing due to fuel shortages and the enforcement of energy intensity targets has rekindled debate on how climate policy must be reconciled with real-life energy issues, and the risk of severe imbalances if the implementation is not smooth.
"I believe this is not only about a technical problem in terms of power system configuration with high proportions of renewables, but also about how we can actually construct a new sectoral ecosystem," Jiang Liping, Vice President at State Grid's Energy Research Institute, said at the event held on Sept. 29.
State Grid, China's largest state-owned power grid that provides power supply to the majority of Chinese provinces, recently organized a seminar with experts from Denmark and Germany to discuss current issues and learn about their energy transition experiences, Jiang said.
"I think the key factor that drives transition in Germany and Denmark, is that they rely heavily on the market and see the role played by the market," Jiang said, adding that China is still in the process of building an effective market, which hasn't played its desired role in the energy transition yet.
"Besides, there's also an issue of coordination between the market and the policy. We need to strengthen coordination between the two," she added.
Several Chinese provinces imposed electricity rationing to critical sectors in recent weeks to conserve fuel stocks ahead of the critical winter heating season due to high coal and gas prices limiting generation capacity, and tight energy consumption targets.
"There are a lot of complicated reasons behind the recent blackouts, but no matter what you say, blackouts shouldn't happen in our transition...In a modern society, residents cannot bear the issue of blackouts. This is the biggest challenge in front of us," Jiang said.
"China has already made significant efforts to reform its power market. We hope that there will be a system at the end of the day which meets the golden rule that the price can truly reflect the cost of services," Fatih Birol, Executive Director with IEA, told S&P Global Platts on the sidelines of the event.

SP Global
Oct 4, 2021 13:31
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