Enel Foundation and the Huaneng Technical Economics Institute (HTERI) signed a Memorandum of Understanding in 2016 to collaborate on research activities about energy transition. The research has included multiple bilateral visits to EU and China, and the organization of dissemination workshops alongside the publication of reports discussing relevant policies and best practices in the energy transition.
Over the last three years, dialogue has covered wide topics such as how grid infrastructures can become the backbone of a decarbonized and decentralized system including integration of renewables, what is the potential of wholesale and retail markets to facilitate the transition, how can technological development and digitalization transform power companies, in terms of both organization and business models. Nevertheless, from 2016, when the research group observed that the Energy transition was ongoing in the EU and emerging in china, to 2019, as China is arguably at the forefront in many dimensions of the energy transition, the focus of the dialogue shifted significantly. In the latest report published by Enel Foundation and HTERI, the research institute of China Huaneng Group, the creation of an electricity system capable of ensuring sustainable development through power market design, flexibility and demand response has become the central issue.
In the last couple of decades environmental policy drivers have been dominant, at least in the industrialized world. Especially in the wake of the Kyoto Protocol, decarbonisation has been the lead focus for strategy evolution. But as new drivers such as consumer expectations and technological innovation emerged, pushing for a digitalized and decentralized paradigm, the electricity sector embarked in a deep process of change in the European Union (EU) and China. In both geographies, common themes emerge, such as the integration of renewables in the electricity market and the key role of electrification to pursue environmental and decarbonization objectives.
However, the energy transition takes different shapes and paces in each geography, although inspired by similar principles of environmental and cost efficiency. A relevant difference emerges as Europe shows advanced degrees of interconnection and integration of national electricity systems as well as competitiveness of wholesale and retail power markets. In the Chinese system, some of these advanced market elements are now being introduced and interconnections between regions are being developed with a fast pace.
In addition, the European context is characterized by the massive presence of distributed resources, including renewables connected at low- and medium-voltage levels, as well as by more active roles played by consumers. Consequently, the role of distribution networks and of demand aggregators is paramount, illustrating a trend, which may be interesting also for China.
One common point is that in order to speed up energy transition, interconnections are crucial both in the EU (between Member States) and in China (between provinces) to improve both market efficiency and integration of renewables by better coping with their intrinsic variability.
Download the documents below for more details.