An Integrated Assessment of China's Wind Energy Potential
Total Page:16
File Type:pdf, Size:1020Kb
An Integrated Assessment of China’s Wind Energy Potential Da Zhang, Michael Davidson, Bhaskar Gunturu, Xiliang Zhang and Valerie J. Karplus TSINGHUA - MIT China Energy & Climate Project Report No. 261 April 2014 The MIT Joint Program on the Science and Policy of Global Change combines cutting-edge scientific research with independent policy analysis to provide a solid foundation for the public and private decisions needed to mitigate and adapt to unavoidable global environmental changes. Being data-driven, the Program uses extensive Earth system and economic data and models to produce quantitative analysis and predictions of the risks of climate change and the challenges of limiting human influence on the environment—essential knowledge for the international dialogue toward a global response to climate change. To this end, the Program brings together an interdisciplinary group from two established MIT research centers: the Center for Global Change Science (CGCS) and the Center for Energy and Environmental Policy Research (CEEPR). These two centers—along with collaborators from the Marine Biology Laboratory (MBL) at Woods Hole and short- and long- term visitors—provide the united vision needed to solve global challenges. At the heart of much of the Program’s work lies MIT’s Integrated Global System Model. Through this integrated model, the Program seeks to: discover new interactions among natural and human climate system components; objectively assess uncertainty in economic and climate projections; critically and quantitatively analyze environmental management and policy proposals; understand complex connections among the many forces that will shape our future; and improve methods to model, monitor and verify greenhouse gas emissions and climatic impacts. This reprint is one of a series intended to communicate research results and improve public understanding of global environment and energy challenges, thereby contributing to informed debate about climate change and the economic and social implications of policy alternatives. Ronald G. Prinn and John M. Reilly, Program Co-Directors For more information, contact the Program office: MIT Joint Program on the Science and Policy of Global Change Postal Address: Massachusetts Institute of Technology 77 Massachusetts Avenue, E19-411 Cambridge, MA 02139 (USA) Location: Building E19, Room 411 400 Main Street, Cambridge Access: Tel: (617) 253-7492 Fax: (617) 253-9845 Email: [email protected] Website: http://globalchange.mit.edu/ An Integrated Assessment of China’s Wind Energy Potential Da Zhang*†, Michael Davidson†§, Bhaskar Gunturu†, Xiliang Zhang* and Valerie J. Karplus† Abstract Computable general equilibrium (CGE) models seeking to evaluate the impacts of electricity policy face difficulties incorporating detail on the variable nature of renewable energy resources. To improve the accuracy of modeling renewable energy and climate policies, detailed scientific and engineering data are used to inform the parameterization of wind electricity in a new regional CGE model of China. Wind power density (WPD) in China is constructed using boundary layer flux data from the Modern Era Retrospective-analysis for Research and Applications (MERRA) dataset with a 0.5° latitude by 0.67° longitude spatial resolution. Wind resource data are used to generate production cost functions for wind at the provincial level for both onshore and offshore, incorporating technological parameters and geographical constraints. By using these updated wind production cost data to parameterize the wind electricity option in a CGE model, an illustrative policy analysis of the current feed-in tariff (FIT) for onshore wind electricity is performed. Assuming a generous penetration rate, no grid integration cost and no interprovincial interconnection, we find that the economic potential of wind exceeds China’s 2020 wind target by a large margin. Our analysis shows how wind electricity resource can be differentiated based on location and quality in a CGE model and then applied to analyze climate and energy policies. Contents 1. INTRODUCTION ............................................................................................................................ 2 1.1 China’s Renewable Energy Policies and Projected Deployment of Wind ............................... 3 1.2 Current State of Wind Connection and Integration Challenges ............................................... 4 1.3 Motivation for This Study ........................................................................................................ 5 2. LITERATURE REVIEW ................................................................................................................. 5 2.1 Previous Assessments of China’s Wind Resources .................................................................. 5 2.2 General Equilibrium Approaches to Incorporating Intermittent Energy Sources .................... 5 2.3 Results of CGE Modeling Studies of China’s Energy and Climate Policies ........................... 6 3. CHARACTERIZATION OF CHINA’S WIND RESOURCES ...................................................... 7 3.1 Re-analysis Methodology ......................................................................................................... 7 3.2 Results of Wind Resource Assessment .................................................................................... 7 4. MULTI-REGIONAL COMPUTABLE GENERAL EQUILIBRIUM MODEL OF CHINA ......... 8 4.1 Model Overview ....................................................................................................................... 8 4.2 Database and Aggregation ........................................................................................................ 9 4.3 Representation of Electricity Sector ....................................................................................... 10 4.4 Calculating Wind Cost Production Curves ............................................................................. 11 4.4.1 Wind Electricity Cost Model .......................................................................................... 11 4.4.2 Physical Constraints ...................................................................................................... 11 4.4.3 Wind Production Costs .................................................................................................. 12 4.5 Representing Wind Resource and Cost Detail in the C-REM Model .................................... 14 4.5.1 Elasticity of Substitution ................................................................................................ 14 4.5.2 Backstop Technology Criteria ....................................................................................... 15 5. CGE MODELING RESULTS ....................................................................................................... 18 6. CONCLUSIONS ............................................................................................................................ 19 6.1 Preliminary Implications for Policy ....................................................................................... 19 * Institute of Energy, Environment and Economy, Tsinghua University, Beijing, China. † Joint Program on the Science and Policy of Global Change, Massachusetts Institute of Technology, Cambridge, MA, USA. § Corresponding author ([email protected]). 1 6.2 Caveats and Future Work ....................................................................................................... 19 7. REFERENCES ............................................................................................................................... 21 1. INTRODUCTION China’s energy demand has grown by 150% over the past decade, making it the world’s largest energy user. The majority of this growth has come from coal energy, which accounted for 70% of total primary energy use and 78% of electricity generation in 2011 (NBS, 2012; CEC, 2012). Estimated costs of air and water pollution in China range from 3–6% of China’s annual economic output (World Bank and China SEPA, 2007). To reduce these adverse impacts and to combat climate change, China is actively scaling up deployment of renewable energy. China leads the world in installed capacity of renewable energy and in wind generation capacity (REN21, 2012). Growth in wind generation surpassed growth in coal-fired electricity for the first time ever in 2012 (CEC, 2013). Integrating large shares of wind energy presents a new challenge for grid operators and policy-makers interested in meeting ambitious climate change mitigation goals. The inherent uncertainty in wind resource availability has the potential to drive up system-wide balancing costs, especially when the grid mix consists primarily of inflexible generation such as coal-fired power. In addition, the most economical resources are also highly distributed and often far from load centers, adding to costs of transmission infrastructure. These characteristics complicate analysis of both economy-wide and electricity sector-specific policy proposals currently under discussion in China. Globally, the International Energy Agency estimates that over $38 trillion of new energy infrastructure will need to be built through 2035 to meet growing demand (IEA, 2011). Because of the long construction and operational lifetimes of conventional power plants and transmission infrastructure, the choice of investments made in Beijing today will have a large impact on the future grid mix available to