DEA-德奥海南清洁能源岛：电力行业转型路径（英文）-2020.11-70页_2mb

Summary of Hainan Clean Energy Island Power Sector Transformation Pathways

Core Content

This report provides an analysis of viable pathways for Hainan Province to achieve its Clean Energy Island (CEI) policy target by 2030. It uses the electricity and district heating optimisation model (EDO) developed by the China National Renewable Energy Centre (CNREC) and incorporates scenarios from the China Renewable Energy Outlook (CREO) 2019. The goal is to transition Hainan's power sector to a clean, low-carbon, safe, and efficient system while addressing economic and operational challenges.

Main Findings

• Energy Demand Growth: Hainan's electricity demand is projected to grow significantly, reaching 58 TWh in 2030 and 72 TWh in 2035, with an average annual growth rate of 4.2% between 2020 and 2035.
• Current Energy Mix: In 2018, Hainan's power generation mix included 38% coal, 14% nuclear, 13% photovoltaics, 9% hydro, and 8% natural gas.
• CEI Target: The CEI policy aims to reduce coal dependence and increase renewable energy (RE) generation. By 2030, the RE share is expected to increase from 36% in the Business-as-Usual (BAU) scenario to 44% in the CEI scenario.
• Emissions Reduction: The CEI scenario would reduce annual CO₂ emissions from the power sector by 91% compared to the BAU scenario, from 7.0 million tons to 1.3 million tons.
• Cost Implications: Achieving the CEI target would increase annual system costs by about 2% compared to BAU. The additional cost is approximately 400 million RMB annually in the 2030-2035 period, with an average of 50-60 RMB per ton of CO₂ abatement.
• Least Cost Path: Solar and wind power are identified as the least cost options for displacing coal consumption, while natural gas is more expensive and not carbon-free.
• Regional Coordination: The CEI policy must be coordinated with regional electricity market reforms and interprovincial trading mechanisms to ensure net positive impact on the broader energy system.

Key Scenarios

• Business-as-Usual (BAU): Continues current policies, leading to a 51% nuclear share in the electricity generation mix by 2030, with 11% wind and 17% solar.
• Clean Energy Island (CEI): Reduces coal use to zero by 2030, increasing RE share and decreasing net exports to the mainland.
• Sensitivity Scenarios: Explore alternative pathways such as increased natural gas, nuclear, and transmission capacity. These scenarios show that while they affect generation and export patterns, they do not impact CO₂ emissions.

Key Recommendations

• Conduct a local power system analysis with a broader regional context to ensure efficient balancing resources and cost-effective energy transition.
• Coordinate policy mechanisms for the CEI target with electricity market reforms to enhance the effectiveness of the policy.
• Perform more in-depth energy systems analysis to meet the 2025 target of 50% primary energy consumption from non-fossil sources.
• Focus on renewable energy development, demand-side management, and interprovincial green energy trading to support the transition.

Challenges

• Power Supply Security: Hainan has relatively low power supply security, with an average annual power outage duration of 15.7 hours.
• High Energy Costs: Hainan ranks second in the country for electricity supply costs, which may be further increased by a clean energy transition.
• Immature Energy Market: The electricity market in Hainan lacks maturity, with limited participants and insufficient mechanisms for market competition.
• Need for Peak Load Regulation: A mechanism to remunerate peak load regulation services is lacking, which could hinder the development of flexible resources.
• Interprovincial Transmission Constraints: Yunnan's hydropower is currently constrained by inadequate transmission capacity and policy frameworks, limiting interprovincial power trade.

Renewable Energy Potential

• Wind Power: Hainan has significant potential for both onshore (1300 MW) and offshore (4250 MW) wind, requiring 638 square kilometers of land.
• Solar Power: Theoretical installed capacity is 25,250 MW, placing Hainan in the rich or medium-rich solar energy area.
• Biomass, Tidal, and Geothermal: These are also available but not as extensively explored as wind and solar.
• Hydropower: Theoretical reserves are 1039 MW, though not included in this analysis.

Regional Context

• Hainan is connected to the China Southern Power Grid (CSG), which includes provinces such as Guangdong, Yunnan, Guizhou, and Guangxi.
• The CEI scenario requires coordination with neighboring provinces to ensure the effectiveness of policy and market mechanisms.
• Interprovincial green energy trading is a key strategy to support Hainan's energy transition, especially for leveraging cost-effective renewable sources from other regions.

Modeling and Methodology

• EDO Model: The electricity and district heating optimisation model (EDO) is used to simulate cost-optimal investments in generation and transmission, considering policy and technical constraints.
• CREO Scenarios: The CREO 2019 Stated Policies and Below 2°C scenarios serve as the foundation for the regional analysis, providing boundary conditions for Hainan's model.
• Regional Deep Dive: The analysis scales down the national CREO model to the provincial level, enabling more detailed and interpretable results.

Conclusion

Hainan has the potential to become a Clean Energy Island by reducing coal dependence and increasing renewable energy generation. However, this transition requires careful planning, regional coordination, and the development of mature market mechanisms. The least cost path involves expanding solar and wind capacity, while natural gas and nuclear can play supportive roles. Interprovincial energy trading and demand-side management are also essential to ensure a smooth and effective energy transition.