Distributed Energy Pilots Difficult to Expect Electricity Price Rule

"We have not done an idealized fully distributed energy project so far," said a co-founder of a company focused on ice-cooled distributed energy.

Lin Boqiang, director of the China Energy Economic Research Center at Xiamen University, said in an interview that China’s distributed energy can only develop slowly in the short term, and long-term depends on the introduction and refinement of relevant supporting policies.

Previously, distributed energy projects have been put into use in Guangzhou University City, Shanghai Pudong International Airport, Shanghai Global International Finance Center, Shanghai University of Technology, Shanghai Minhang Hospital, Beijing Olympic Media Village, and Zhongguancun Software Park. However, most of the projects that were put into use were island-type operations. There was no breakthrough in saving electricity and feeding back to the grid and realizing online access and grid connection.

Industry sources told reporters that "distributed energy is actually an integrated energy solution. At present, it is only practiced in commercial communities and development zones and there is no large-scale promotion."

Before this, some media reported that the “distributed” energy project of Beijing South Railway Station has been started for many years, but due to the “on-grid” issue has been put on hold, the Beijing Olympic media village project was also suspended due to grid connection problems.

The main reason why it cannot be promoted on a large scale is that the supporting electricity price policy is not clear.

Policy Unveiling Electricity Price Details Unknown National Development and Reform Commission and other agencies have jointly issued the "Guidance on the Development of Distributed Natural Gas Resources" (hereinafter referred to as the "Guiding Opinions"). According to the guidance, it is expected that by 2020, it will be promoted in cities above the national scale. With a distributed energy system, the installed capacity will reach 50 million kilowatts.

According to the research report released by China International Capital Corporation, with an investment of 3,500 yuan per kilowatt, the total investment in power generation equipment will be as much as 157.5 billion yuan in the next decade.

According to Anxin Securities, the construction of large-scale distributed energy projects will benefit most suppliers of small gas turbines and waste heat boilers as well as suppliers of auxiliary equipment for gas turbines.

However, in an interview with this reporter, Li Yong, co-founder of Gaoling Energy Co., focused on the development of distributed energy, said that this figure is a policy goal and not an actual investment.

Li Yong believes that the "Guiding Opinion" is a good news for the development of distributed energy. Explain that the country is also gradually promoting this piece of development. However, as far as specific projects are concerned, they also need subsidies from local governments, especially electricity price subsidies.

Lin Boqiang said that the issuance of the "Guidance Opinions" was mainly due to the fact that the laying of the natural gas pipeline network in China is basically completed and the supply of sufficient quantities has provided sufficient conditions for the development of natural gas distributed energy.

"Not only subsidies, but many local commitments are not in place. At present, most of the natural gas power generation is used for peaking. Further development requires the country to issue a price ladder policy, which will widen the power price gap between power peaks and troughs, or like wind power. Separate pricing for distributed energy, otherwise the current situation is difficult to change.” Lin Boqiang said.

Grid-connected bottleneck restricts scale development “The current distributed energy projects have basically not reported successful cases to the grid,” said Li Yong, the company mentioned above. “The grid is often unwilling to receive electricity generated by distributed energy sources. There are no preferential prices. In the low season, the electricity used for energy storage also lacks price subsidy and concessions. Actually, it also evades power grids and other reasons."

Lin Boqiang explained that currently distributed energy sources are mostly self-used, used by communities or development zones, or in remote areas where prices are high. The price ladder has not been pulled large enough, and grid companies have no incentive to buy high and sell low power to support distributed energy. Reporters found that Japan and the United States both promoted by the grid companies.

Many experts in the industry believe that online and grid-connected networks are currently facing a major problem in the development of distributed energy. Because of this problem, many distributed energy companies adopt strategies that focus on certain areas, such as focusing on energy storage, centralized heating, and centralized cooling, and are away from the cold, heat and power cogeneration technologies required by the Guidance. Still far.

The "Guidance Opinions" proposes to encourage the use of cogeneration technology in areas with developed economies and high energy quality requirements or natural gas resources to establish demonstration projects.

Li Yong said that the technical barriers to the development of distributed energy are relatively low. At present, it is mainly due to the difficulty of “grid-connected networks” and unclear subsidies that restrict further development.

At present, the main drivers of distributed energy are some local governments and some units that have energy-saving needs. However, the grid company has not made any major moves. "Actually, it is most appropriate for grid companies to do their own distributed energy stations." Li Yong said, however, the electricity grid companies lack motivation because of unclear pricing policies.

Lin Boqiang bluntly stated that the supporting electricity price policy is the key to the development of distributed energy, especially natural gas distributed energy. According to him, at present, the natural gas power generation project in Shenzhen, the government subsidies are not in place, the natural gas power plant suffered serious losses, and even stopped production.

The "Guidance Opinions" stated that it will study the systemic issues such as the formation mechanism and operational mechanism of natural gas distributed energy on-grid tariffs, which is considered as a hope for solving the electricity price issue. "This problem has been solved, and distributed energy can develop greatly." Lin Boqiang said.

Subsidy concessions recognize non-standard natural gas distributed energy is the use of natural gas as fuel, through the use of cold power and thermal power to achieve cascade utilization of energy, comprehensive energy efficiency is more than 70%, and in the load center near the realization of energy supply of modern energy supply The approach is an important way for the efficient use of natural gas.

According to the “Guidance Opinion,” natural gas distributed energy has the advantages of high energy efficiency, clean and environmental protection, good safety, peak load reduction, and good economic returns. It also pointed out that “Distributed natural gas projects that are implemented through contract energy management and meet the requirements of energy-saving services can enjoy relevant tax incentives.”

However, according to Li Yong, there are some problems in the certification of energy conservation and environmental protection, resulting in distributed energy projects can not always apply for subsidies and tax incentives. The price difference between the peaks of Bofeng Valley is not large enough, and it also limits the profitability of enterprises. There is a problem of determining standards for the energy conservation of distributed energy projects. “For example, storing low-voltage electricity during the night is ultimately a matter of electricity. At present, it is not considered as energy-saving.”

Natural gas distributed energy also faces this problem. At present, the price of natural gas is not low. If peaks are generated at any cost and become peaked, it will become an individual behavior of the company, and it will be difficult to integrate into the power grid. There is a problem of insufficient development momentum, and it will eventually become another self-sufficient power source for power-short companies. Li Yong proposed that it is possible to design a comprehensive energy solution and adapt it to local conditions. The use of various forms of energy can solve this problem, but China has not yet reached this stage.

Lin Boqiang commented that the main reason is that China does not have a strong third-party assessment agency. The government subsidies often have promises and no action, causing project losses. Various issues have caused China's distributed energy to develop slowly in the short term, and in the long term it will depend on the introduction and refinement of related supporting policies.