In a statement dated October 8 (that first appeared online on October 19), China’s National Development and Reform Commission (NDRC) launched pilots for renewable energy policy reform in Gansu province and Inner Mongolia. These provinces have substantial wind and solar resources and rapidly growing renewable generation capacity, but they have suffered from severe curtailment problems.

Reducing curtailment of renewable energy is a major goal of the current round of power sector reform that was launched by the State Council and Central Committee of the Communist Party in March. The new pilots are also broadly in line with a major policy document on renewable energy from NDRC earlier this year. Like these existing documents, though, the new statement is light on details.

NDRC stresses the need to use a wide range of measures and encourages “boldly exploring” new approaches to reducing curtailment of renewable energy. Several aspects of the pilots are worth noting.

Exports and domestic consumption: NDRC calls for increasing electricity exports from these provinces. At the same time, the pilot statement emphasizes increasing consumption within the provinces. Increased consumption is to be achieved, in part, by “transferring industry from the eastern part of the country,” electrifying industries that currently directly consume coal, and encouraging renewable energy generators to enter into contracts with end users in the province (“direct trading”). NDRC expects this within-province consumption to “reduce the need for building of new transmission lines.”

Renewable energy integration: The document mentions several measures to help integrate renewables in the two provinces, most of which have been discussed (or piloted) before.

• NDRC restates the need for improved dispatch (“renewable priority dispatch”) in order to reduce curtailment of renewable resources. The launch of these pilots follows close on last month’s joint presidential announcement regarding dispatch issues and the inclusion of dispatch reform in the new Air Law. The new NDRC statement also briefly mentions the need for a new compensation mechanism (in addition to generation rights trading) to facilitate this redistribution of operational hours. However, the details of how this will work are left unspecified.
• NDRC lists additional measures to promote flexible operation of conventional power plants in support of renewable generators, mentioning retrofits for coal-burning power plants and storage capacity for combined heat and power facilities.
• NDRC also briefly mentions increased use of pumped-storage hydro, improved wind and solar forecasting mechanisms, and demand response to improve integration.

NDRC’s statement on the new pilots represents a new commitment to experiment with comprehensive measures to support renewable energy integration. As it did in earlier policy announcements this year, NDRC indicates that there will be no immediate move to optimized, economic dispatch and that the practice of annually allocating target hours of operation will remain in place. Still, the reallocation of hours to renewables and the focus on supporting renewables integration are significant, building on similar dispatch reform pilots that have been implemented in other parts of the country.

Though NDRC mentions several very useful measures to promote renewable energy integration, the new statement is short on details and leaves many questions unanswered. In addition to opting not to end target-hour allocations, the statement does not call for wider cross-provincial balancing areas—two key recommendations for renewable integration. It also lacks clear guidance on generator compensation issues, which are at the root of problems with inefficient dispatch in China.