Power System Decarbonization Pathways in Northwestern China

In September 2020, China announced a national goal of achieving carbon peaking by 2030 and carbon neutrality by 2060. Under China’s ambitious national commitment, provinces (autonomous regions or municipalities) have started to make plans to achieve their own dual carbon goals. In China, provincial-level research is particularly important for power system decarbonization, because the provincial power grid has always been the core unit of China’s power system planning and operation. Given that various regions or provinces have different natural resource endowment, economic structure, and drivers for economic growth, it is necessary to customize the decarbonization pathway for each province.

China’s northwestern region is facing the challenge of transitioning from coal to renewable fuels. At the same time, the region is one of the most important energy bases in China, and about 28 percent of its total power generation is exported to other provinces. With the completion of cross-regional transmission lines and large energy bases, the proportion of exports will continue to grow. Therefore, power system decarbonization in the northwestern region will have a significant impact and will provide best practices for the national power system.

Our project focuses on Shaanxi province as a typical province in northwestern China. Shaanxi province has the highest GDP, the largest population, and the largest share of coal in its generation mix in the northwestern region. This report provides six key recommendations for Shaanxi to promote policies and market mechanisms to achieve early peaking.

1. Create the necessary market conditions for the accelerated development of renewable energy
2. Accelerate the development of energy storage through policy and market mechanisms
3. Explore demand-side flexibility and coordinate the volatility of supply and demand
4. Create safe and fair conditions for the transition of coal power
5. Improve the interprovincial power trade and increase the export of clean energy through new HVDC lines
6. Consider the transformation of industrial structures and accelerate the decoupling of economic growth and coal investment

The case study of Shaanxi demonstrates the pathway for other provinces heavily dependent on coal to accelerate the construction of a cleaner power system. This report also serves as an example for other regions or countries, offering broader insights to those governments aiming to achieve power system decarbonization.