The need for a new type of power system is now

As China ramps up clean energy production, demand for a new type of energy system is growing as the country seeks to address the challenges of intermittent renewable energy to fuel manufacturing and emerging sectors like smart grids, experts say.

At the end of June, China’s installed renewable energy capacity reached 1.65 billion kilowatts, up 25 percent from a year earlier. That’s about 53.8 percent of the country’s total generating capacity.

The combined capacity of wind and solar power plants (1.18 billion kW) has exceeded that of coal-fired power plants (1.17 billion kW), the National Energy Administration said. The installed capacity of new energy generation will continue to grow and will reach about 1.6 billion kW by 2025, according to the China Renewable Energy Engineering Institute.

Looking ahead, there are obstacles to the sector’s development, as the intermittency of renewable energy sources poses challenges to the traditional energy system. There is an urgent need to increase the grid’s capacity to better integrate green energy, experts said.

To this end, China recently released an action plan to accelerate the construction of a new-type energy system from 2024 to 2027, focusing on areas such as high-quality development of distribution networks and expansion of electric vehicle charging infrastructure.

Policy-driven improvements and transformations in multiple system components—power plants, grids, consumption facilities and storage—will create various opportunities for relevant companies, experts said. Emerging sectors such as new energy storage, virtual power plants and smart grids are expected to benefit more.

“It is estimated that by 2060, clean energy production will account for 90 percent of China’s total energy generation. Clean energy will become a major part of energy consumption,” Shu Yinbiao, a professor at the Chinese Academy of Engineering, said at an event in Beijing on Wednesday.

“In this context, the energy system will undergo a significant change. On the generation side, sources will shift from highly controlled coal to poorly controlled and highly volatile new energies. On the grid side, the focus will shift from large networks to a mix of large networks, distribution systems and microgrids.”

Hydropower, Shu said, can provide the necessary support for the safe operation of a new type of energy system, playing a key role in maintaining voltage stability.

Hydropower from peak storage is also important for a new type of energy system because it provides a steady supply of renewable energy to power systems by storing excess energy and discharging it when needed. Its energy conversion efficiency can reach about 70 to 80 percent and costs only about 40 percent of the cost of electrochemical storage, the academician said.

In addition to pumped-storage power plants, new types of energy storage technologies are also developing rapidly, such as compressed air energy storage, which is characterised by flexible systems and short construction times.

NEA data showed that the installed capacity of new energy storage projects nationwide reached 44.44 million kW as of mid-2024, an increase of more than 40 percent compared to the end of 2023.

The development of the new type of energy system is also accelerating the progress of large-scale networks and network distribution networks, and power scheduling and network operations are increasingly integrating technologies such as artificial intelligence. This not only benefits related manufacturing industries, but also promotes new business models such as AI-based network inspection, smart grids and virtual power plants, said Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University.

Lin said coal-fired power could continue to provide the backbone of securing basic energy supplies in the short term, driving the development of new technologies such as carbon capture, use and storage through low-emission and clean use of fossil fuels.