To thoroughly implement the spirit of General Secretary Xi Jinping's important speech at the 12th collective study session of the Political Bureau of the Communist Party of China Central Committee, enhance the power system's capacity to absorb new energy, ensure a reasonable utilization level while promoting large-scale development of new energy, and drive its high-quality development, the National Energy Administration has issued the Notice on Ensuring the Absorption of New Energy and Promoting Its High-Quality Development (Guo Neng Fa Dian Li 〔2024〕 No. 44, hereinafter referred to as the "Notice"). The following is an interpretation of the Notice from three aspects.

 I. Background of Issuance

In recent years, the National Energy Administration has continuously worked to promote the absorption of new energy, vigorously advanced the construction of inter-provincial power transmission channels, strong main power grids, and distribution networks, continuously improved the regulating capacity of the power system, expanded the volume of new energy market-oriented transactions, and driven the rapid development and efficient utilization of new energy. In 2023, the utilization rate of wind power nationwide reached 97.3% and that of photovoltaic power reached 98%, maintaining a high level. Over the past two years, the development of new energy has further accelerated. As of the end of April 2024, the cumulative installed capacity of wind and photovoltaic power nationwide exceeded 1.1 billion kilowatts, a year-on-year increase of approximately 38%, leading to a significant increase in absorption demand. To adapt to the rapid growth of new energy and ensure its high-quality development, it is necessary to optimize and improve policies and measures for new energy absorption, consolidate the foundation, build on achievements, and promote reform and innovation, so as to promote the construction of a new energy supply and absorption system through high-quality absorption work.

The Notice puts forward measures for absorption work targeting key areas of concern that are in urgent need of improvement, such as the coordinated development of power grids and power sources, the improvement of regulating capacity, the allocation of power grid resources, and the optimization of new energy utilization rate targets. It is of great significance for planning and building a new energy system, constructing a new power system, and promoting the achievement of the "dual-carbon" goals.

 II. Key Tasks

The Notice proposes 4 key tasks.

- First, accelerate the construction of supporting power grid projects for new energy. With the large-scale grid connection of new energy, the demand for supporting power grid construction has risen sharply, requiring accelerated planning and construction of supporting power grids and optimization of grid connection procedures. The Notice proposes to strengthen planning management and put forward improvement requirements for the planning management of supporting power grid projects of 500 kV and above, below 500 kV, and distribution networks respectively. Among them, it is clearly stipulated that a "green channel" for inclusion in planning shall be opened for key projects such as large-scale wind and photovoltaic bases and basin-based integrated hydro, wind, and solar energy bases arranged by the state. The Notice emphasizes accelerating project construction. Energy authorities at all levels, together with power grid enterprises, shall establish a list of new energy supporting power grid projects that have been included in the plan, and accelerate the preliminary work, approval, and construction while ensuring safety. Power grid enterprises shall optimize investment plan arrangements and align them with the progress of preliminary project work. The Notice requires optimizing the grid connection process. Power grid enterprises shall take the initiative to provide services for new energy grid connection, simplify the review process, and further improve efficiency.

- Second, actively promote the improvement of system regulating capacity and the coordinated development of power grids and power sources.The construction of system regulating capacity is an important guarantee for new energy absorption and needs to be promoted in coordination with the development of new energy. The Notice proposes to strengthen the construction of system regulating capacity. Provincial energy authorities, together with the dispatched agencies of the National Energy Administration and relevant departments, shall conduct an analysis of the demand for power system regulating capacity based on the growth scale of new energy and the utilization rate target, and formulate regional regulating capacity improvement plans in light of local conditions. The Notice clarifies the need to strengthen the evaluation and identification of the effects of regulating resources, and conduct a comprehensive assessment of the effects of flexibility transformation of coal-fired power units, the regulating performance of various energy storage facilities, and the scale and confidence of load-side regulating resources participating in system regulation. In view of the insufficient coordination and poor connection between the planning and construction schedules of some new energy and power grid projects, while requiring accelerated planning and construction of supporting power grids, the Notice emphasizes the need to arrange the construction of new energy projects in an orderly manner. Provincial energy authorities shall, in combination with absorption capacity, scientifically arrange the development layout, commissioning schedule, and absorption direction of centralized new energy, guide and supervise municipal (county) energy authorities to reasonably arrange the development layout of distributed new energy, and strengthen the coordination between new energy and supporting power grid construction. The Notice emphasizes the need to effectively improve the grid-connection performance of new energy, requiring power generation enterprises to explore the application of new technologies to improve the accuracy of new energy power prediction and active support capacity. The National Energy Administration shall organize the revision of new energy grid-connection standards.

- Third, give full play to the role of the power grid as a resource allocation platform. Under the new situation, to expand the scope of new energy absorption, it is necessary to flexibly adjust the dispatching and operation mode and improve the capacity of inter-provincial mutual assistance and resource sharing. The Notice proposes to further improve the resource allocation capacity of power grids. Power grid enterprises shall further increase the proportion of new energy transmitted through inter-provincial and cross-regional power transmission channels, strengthen inter-provincial mutual assistance, comprehensively improve the observability, measurability, adjustability, and controllability of distribution networks, fairly call on various regulating resources, and build an intelligent dispatching system. The Notice emphasizes giving full play to the role of the power market mechanism, accelerating the construction of a power market mechanism adapted to the characteristics of new energy, and further promoting the participation of new energy in the power market. Optimize the inter-provincial power trading mechanism, and allow the power-sending party to complete the power transmission plan by purchasing new energy electricity in the power-receiving province during periods when the electricity price in the power-receiving province is low, in accordance with the contract agreement.

- Fourth, scientifically optimize the new energy utilization rate target. From the perspective of system optimization, the new energy utilization rate target is related to factors such as the per-kilowatt-hour cost of new energy and the cost of absorption measures. In recent years, the progress of new energy technologies has led to a decline in power generation costs, and the large-scale grid connection of new energy has put forward higher requirements for system absorption. It is urgent to adjust the management method of the new energy utilization rate target and study new approaches in light of new situations. The Notice proposes to scientifically determine the new energy utilization rate targets for various regions, fully considering factors such as new energy development, system carrying capacity, system economy, and user affordability, and comprehensively determine the regional utilization rate targets. Some regions with better resource conditions may appropriately relax the target, which shall not be lower than 90% in principle, and conduct an annual dynamic assessment according to the absorption situation. The Notice clarifies the need to optimize the management method of the new energy utilization rate target. Provincial energy authorities shall assume overall responsibility for the local new energy utilization rate target and organize relevant units to study and put forward the annual new energy utilization rate target in the first quarter of each year in accordance with relevant principles. The National Energy Administration shall conduct national coordination together with relevant units. The Notice emphasizes strengthening the implementation of the new energy utilization rate target, requiring provincial energy authorities to determine the annual new energy development plan and supporting absorption plan based on the renewable energy power absorption responsibility weight and the new energy utilization rate target. Power grid enterprises shall continuously improve absorption guarantee measures around the new energy utilization rate target.

III. Management Measures

- First, earnestly do a good job in the statistics and management of new energy absorption data. Power generation and power grid enterprises shall strictly implement the statistical methods for available power generation and restricted power of wind farms and photovoltaic power stations as stipulated in relevant documents, and unify the statistical caliber of new energy utilization rates. The National New Energy Power Absorption Monitoring and Early Warning Center, together with the National Renewable Energy Information Management Center, shall do a good job in the statistical verification of new energy absorption data. Power grid enterprises at all levels shall strengthen the disclosure of data related to new energy absorption.

- Second, carry out normalized monitoring, analysis, and supervision of new energy absorption.The National Energy Administration shall organize relevant units to carry out monthly absorption monitoring, semi-annual analysis and consultation, and annual absorption evaluation. The National Energy Administration and its dispatched agencies shall take the supervision of new energy absorption as an important regulatory content, focus on the requirements of absorption work and the implementation of absorption measures, carry out normalized supervision, and focus on strengthening the supervision of inter-provincial new energy absorption measures.

Source: National Energy Administration