Key issues of Development and Utilization of New Energy in China under Carbon Peaking and Carbon Neutrality

. High-quality development of new energy cannot be achieved without high-level utilization. Utilization rate has become a barometer to measure the effectiveness of new energy management. Through the joint efforts of government departments, power generation enterprises, power grid enterprises, and industry insiders and outsiders, new energy utilization rate has remained above 95% for many years, achieving high-level utilization during large-scale development. In the future, with the continuous increase in the penetration rate of new energy, maintaining high utilization rates presents significant challenges in terms of technology and cost. This paper utilizes the NEOS software independently developed by the State Grid Energy Research Institute to analyse the utilization of new energy in the future and proposes relevant policy recommendations for reasonable utilization rates.


Status Quo of New Energy Development in China
China is rich in new energy resources and has been expanding the scale of wind power and PV power development and utilization in recent years as shown in Fig.1. [1][2][3]In 2022, China had the largest installed capacity of new energy in the world that stood at 760 million kW. This included 370 million kW installed capacity of wind power and 390 million kW installed capacity of solar power, accounting for 29.7% of the total and to be the second largest power source. The new installed capacity of wind and PV power was 120 million kW, including 36.73 million kW wind power and 86.06 million kW PV power, both of which set records over the years. [4][5] From the perspective of distribution, the installed capacity of power generation from new energy sources in Northeast China, Northwest China, and North China accounted for 59%. The new energy utilization rate has been over 95% for more than four consecutive years. In 2022, China's power generation capacity from new energy sources topped 1 trillion kWh to reach 1.20 trillion kWh for the first time, including 762.40 billion kWh wind power generation, up by about 16.3% year on year; 427.60 billion kWh PV power generation, up by about 30.8%, both of which accounted for about 13.7% of the total power generation; wind and PV power utilization rates reached 96.8% and 98.3%, respectively.
New energy curtailment is concentrated in areas rich in new energy resources and during the midday, when PV power generation explodes. [6][7][8][9][10] From January to March 2023, the utilization rates of new energy in Hebei, Inner Mongolia, and Qinghai dropped to less than 95%. In terms of abandonment hours, solar energy consumption during the midday is a serious problem, the duck curve has worsened into a "canyon curve". Shandong, for example, now has 23.34 million kW wind power installed capacity and 45.51 million kW PV power installed capacity, both of which account for 35.6% of the total. From May 1 to 2, among the 48 hours of real-time spot trading, a total of 32 hours witnessed "negative electricity prices". Specifically, 21 hours in a row from 20:00 on May 1 to 17:00 on May 2 witnessed negative real-time spot trading prices. This reflected a supply-demand imbalance in the power market during some hours after the proportion of new energy increased, and the excess power necessitated some price incentives to stimulate power demand or suppress power supply. [11][12][13]

Outlook of New Energy Development in China
China has abundant potential in new energy generation resources, with technically exploitable reserves of more than 3.5 billion and 5 billion kW, respectively. The new energy industry chain is complete, with downward costs to encourage intensive development and utilization at a continued high proportion. By 2060, the installed wind power capacity will reach 2 billion kW as shown in Fig.2 , including 300 million kW of offshore wind power; the installed solar power capacity will reach 2.5 billion kW, including 250 million kW of solar thermal power. In West China and North China, we should actively promote the development of large-scale wind and PV power bases in deserts, Gobi, and wilderness. In East China and Central China, we should develop distributed PV power, decentralized wind power and offshore wind power in East China and Central China according to local conditions. Energy curtailment tends to be concentrated on the midday when PV power generation explodes more than the period with low load. As shown in Fig. 3, Energy abandonment is concentrated on 11:00 to 17:00, accounting for about 67% of the annual total.  It is generally believed that the consumption capacity can be improved continuously through energy storage. It should be noted that there is a "saturation effect" when short-term energy storage is used to promote consumption. In other words, with a high penetration rate of new energy, the role of more frequent daily regulation and other types of short-term energy storage in enhancing the consumption of new energy will gradually diminish, and the utilization rate of new energy will gradually be "saturated" as the increase of energy storage scale. The reason is that: As the proportion of installed capacity of new energy increases, when the short period of energy abandonment changes to the extended period of continuous energy abandonment, the stored power under daily regulation of energy storage has little chance of being released, and the role of further energy storage increase in enhancing the utilization rate of new energy will diminish and tend to be saturated.
Take the typical province at the sending end as an example. As shown in Fig. 4, considering the installed new energy capacity of 71 million kW (60%) in 2025, the energy storage scale will increase from 0 to 8 million kW and the utilization rate of new energy will increase by 3.4 percentage points. However, when the energy storage scale further increases from 8 million kW to 16 million kW, the utilization rate will increase only by 0.37 percentage points, which means every million kW of energy storage can increase the utilization rate of new energy by 0.046 percentage points, down from 0.43 percentage points.
Resources on the demand side are important drivers to ensure the safe operation of the power system and promote the consumption of new energy. It is expected that the resources available on the demand side will be more than 8% and 20% of the maximum load in 2030 and 2060, respectively. Efforts should be made in terms of planning and design, market cultivation, mechanism improvement, and infrastructure construction to establish a sound application system for resources on the demand side.
With the increasing penetration of new energy, it is expected that the system cost per kW of power generation from new energy will be 2.4 times and 4.5 times of the 2020 level by the end of the "14th Five-Year Plan" and the end of the "15th Five-Year Plan" periods, driving up the cost of power supply. The system cost of new energy will eventually be reflected in end-user electricity prices.
It is advisable to adopt carbon reduction pathways "from slow to fast", in order to reduce the transformation cost and avoid concentrating the conflicts in the near term.
Use market mechanisms as the main tools, take advantage of the room for new energy cost reduction to improve the price formation mechanism of ancillary services, promote the orderly participation of new energy in spot market competition, and divert the system cost brought by new energy in a scientific way.
The construction of market mechanisms needs to improve the adaptability to the low-carbon transition. Since China's electricity market is still imperfect, it is important to focus on three market mechanisms -the participation of new energy, the support for the transformation of the functional positioning of various power sources, and the electricity-carbon market coordination in the future.
Integrated development of distributed power generation, microgrids and large grids is also crucial for the development of new energy generation. Give full play to the role of power grid as an energy conversion hub and a basic platform. The center of clean energy resources and load in China taken on a reverse distribution pattern. Power grids are central to promoting the large-scale development of new energy and the transformation of energy development mode in the future. On the send side, it is necessary to build strong main grids to support the development of large energy bases in places such as deserts, Gobi and wilderness, so as to realize multi-energy complementarity of wind power, PV power, hydropower, and coal fire and to improve the outbound transmission efficiency of clean energy. On the receiving sid, it is necessary to rely on large power grids to support the safe operation of multi-infeed DC and ensure the security of energy supply in East China and Central China.
Efforts should be made to build distribution networks and microgrids characterized by high reliability, friendly interaction, economy and efficiency. It is important to adapt to the massive access of distributed energy, electric vehicles and energy storage facilities and to promote the coordinated development and friendly interaction of source, network and load.

Conclusion
Uphold the awareness of realizing a reasonable utilization rate, and try to expand the diversified utilization methods of new energy is a key for high quality development of new energy. A moderate reduction in the utilization rate of new energy can help expand the future development space, reduce the development costs, and increase both installed capacity and power generation. In China, for example, for every 1% down from the 95% utilization rate of new energy in 2025, the installed capacity of new energy will increase by 26 million to 38 million kW. In the medium to long term, with increasing penetration of new energy, affected by the considerable intra-day fluctuations in power output and the lack of long-cycle regulation capacity of the system, it will be difficult to fully utilize new energy by relying solely on the power system. Cross-system development of circular carbon economy is a feasible way to diversify the utilization of new energy. We should fully develop P2X and crossenergy system utilization methods such as green hydrogen production by electrolysis, gas and heat, and these products should further be combined with carbon dioxide captured by thermal power CCUS to produce methanol, methane and other products that can be applied in the field of industrial raw materials to achieve circular carbon economy.