Power industry carbon reduction path

High dependence on coal and low abundance of renewable resources: The energy transition in such regions will face serious challenges and a "soft landing" should be considered. In order to ensure energy security, we can steadily retire unprofitable backward coal power capacity, simultaneously invest in CCS technology and its infrastructure construction, promote clean coal power, and at the same time combine local renewable energy generation with energy input to optimize the energy structure. To ensure that economic development is not affected, local governments should focus on improving the efficiency of local energy use, take the lead in assisting the rehabilitation and redevelopment of retired coal power plants, promote the development of neighboring low-carbon industries, and empower local communities through grants and training, and do a good job of re-employment of workers.

High dependence on coal and high abundance of renewable resources: This type of region is rich in renewable resources, but requires large-scale decommissioning of coal power plants, which can be described as opportunities and challenges, and should accelerate the transformation. In terms of energy security, exit plans should be developed for all coal power installed capacity, replacement of retired coal power capacity with renewable energy, and investment in energy storage technology to ensure the stability of power supply.

Low dependence on coal and high abundance of renewable resources: These regions have high natural endowments and should be the "vanguard" to lead the development of renewable energy in China. Local governments should actively formulate policies to accelerate the construction of renewable energy, and collaborate with governments and grid companies to promote cross-regional electricity transportation. At the same time, in terms of economic development, the electrification of the local economy should be accelerated to become an industrial base for energy-intensive industries and provide new job opportunities to attract high-quality talents.

Low dependence on coal and low abundance of renewable resources: This type of region is less affected by the transformation of the power system, and should focus on the future, actively switch to the use of renewable energy power, and formulate energy strategies in line with local economic development planning.

Challenge 3: Renewable energy costs are still high: Compared to the above two types of challenges, the cost challenge of renewable energy is relatively small. Thanks to a good local supply chain, domestic centralized onshore wind power and photovoltaic have begun to compete at parity, and distributed and offshore wind power is expected to enter the zero-subsidy era soon.

Along the current technological development trajectory, the cost of renewable energy will continue to fall, and by 2030, the cost of wind power and photovoltaic will be expected to be lower than coal power across the country. As the era of parity accelerates, the return on investment of most renewable energy projects is decreasing year by year; At the same time, in response to the call of the state, a large number of leading enterprises in other industries are also actively involved in the investment and construction of renewable energy. Although this has greatly stimulated the vitality of the market, it has also intensified the competition in the renewable energy industry and further compressed the profit margins of relevant enterprises. On the one hand, enterprises can improve profitability by continuously optimizing the operational performance of wind and solar power plants throughout their life cycle (pre-development, construction, operation and maintenance cycle, etc.), on the other hand, they can improve the overall return through market means:

Participate in green power certificate trading. China's green certificate system began in 2017, and over the years, the mechanism has become increasingly perfect. With the promotion of renewable energy parity Internet access and "compulsory green certificate", the future power generation, power grid, electricity sales, users and other implementation subjects have the demand for green certificates, which will significantly increase the overall demand; The linkage between the price of green certificate and the price of carbon sink will also help to further improve the price mechanism. For renewable energy companies, green certificates may become an important way to increase project revenue.

Participate in carbon trading. Currently, renewable energy companies can access the carbon market through nationally Certified Voluntary emission reduction (CCER) trading, and key emitters can offset up to 5% of their verified carbon emissions by purchasing CCers from renewable energy companies. Although the CCER filing work has been suspended since 2017, in the long run, the organic combination of CCER (or a similar form of product) and green certificate is bound to become an important means of subsidizing the development of renewable energy.

Use financial means to improve profitability. For enterprises that already have renewable energy assets, they can expect to issue bond products based on income assets to quickly withdraw funds and accelerate investment in new projects. Since power plants that have been put into operation in the past usually enjoy highly subsidized electricity prices and profit margins are usually better, enterprises can also consider acquiring renewable energy assets that have been built to improve the profitability of the overall assets.