Distributed Energy Support Policy Cannot "Doze Down"

At the beginning of October 2011, the National Development and Reform Commission, the Ministry of Finance, the Ministry of Housing and Urban-Rural Development, and the National Energy Administration jointly issued the "Guidance on the Development of Distributed Natural Gas Resources," and proposed that during the "Twelfth Five-Year Plan" period, China will build about 1,000 natural gas distributions. The energy project is planned to build 10 or so distributed energy demonstration areas with typical characteristics.

Natural gas-fired distributed energy sources are clean, efficient, and economical. Although distributed energy power generation is emerging in China, it has developed rapidly in North America, the European Union and Japan and South Korea. The development of distributed energy can not be separated from the policy support. In recent years, the EU and the national level have issued a series of supportive policies for distributed energy, especially at the national level, the policy is more specific and operational.

China has also introduced some policies and regulations concerning the development of distributed energy, but most of these terms have only been made in some principles. The supporting policies for encouragement and subsidies are few and the operability is not strong. In this issue, we invited Xu Bo, a senior economist at the China Petroleum Economic and Technical Research Institute, who is engaged in research on related topics, to write an article for the newspaper. Through the analysis of EU's distributed energy incentive policies, we propose the future development direction and focus of China's distributed energy industry policy.

In August and October 2011, the State Council, the National Development and Reform Commission, and relevant government agencies successively promulgated the "12th Five-Year Plan for Comprehensive Energy Conservation and Emission Reduction Work" (hereinafter referred to as the "Work Programme") and "About the Development of Natural Gas Distribution." Energy Guidance (hereinafter referred to as “Guidance Opinions”). This shows that China will endeavor to form a new pattern of large-scale development of energy-saving and environmental protection industries during the “Twelfth Five-Year Plan” period, and plans to promote the improvement of energy comprehensive utilization efficiency and realize the task of energy conservation and emission reduction by starting a batch of natural gas distributed energy demonstration projects.

Natural gas distributed energy has large-scale development conditions. The “Work Plan” states that: By 2015, energy consumption per million yuan of GDP in China will drop to 0.869 tons of standard coal (calculated at 2005 prices). During the "Twelfth Five-Year Plan" period, energy saving of 670 million tons of standard coal was realized. In 2015, the total amount of chemical oxygen demand and SO2 emissions in the country was controlled at 23.376 million tons and 20.864 million tons, respectively; the total national ammonia nitrogen and NOx emissions were controlled at 2.38 million tons and 204.26 million tons, respectively. Therefore, the energy saving and emission reduction situation is still very serious and the task is very arduous.

At present, emissions of SO2 and solid waste from natural gas fuels are almost zero, CO2 is reduced by more than 60%, NOx is reduced by 80%, and the area and water consumption are reduced by more than 60%. Therefore, the development of distributed natural gas can provide strong support for achieving these goals.

With the growth of China's domestic natural gas and imported natural gas, it is estimated that the maximum demand of 260 billion cubic meters in 2015 will have a surplus of 30 billion cubic meters at that time and resources for the development of distributed natural gas resources will be guaranteed. At the same time, as China's smart grid construction speeds up, it will effectively cope with the frequent and unstable voltage load of distributed energy, and solve the problem of distributed energy grid-connected technologies. Furthermore, there are already a number of distributed energy specialized service companies in China, and most of the existing projects have performed well. Natural gas distributed energy has already met the conditions for large-scale development in China.

Significant achievements in the development of distributed energy in the EU Natural gas-fueled distributed energy sources are clean, efficient, and economical. They have developed rapidly in North America, the European Union, and Japan and South Korea in recent years. In particular, some countries in the European Union have adopted policies to stimulate distributed energy development with very typical results. In-depth study of its main contents will certainly bring useful lessons for our country to formulate practical and feasible natural gas distributed energy development policies.

At present, the EU's distributed energy resources account for an average of 10% of the electricity market, Germany, the Netherlands and the Czech Republic have reached 38%, of which Denmark is as much as 53%. European fuel types are diverse, but they are mainly based on natural gas and are being closely integrated with renewable energy development. Formally, it includes micro-thermo-electric cooling (mCHP) and industrial cogeneration (CHP), fuel cells and heat pumps.

In recent years, the EU and the national level have issued a series of supportive policies for distributed energy sources, particularly at the national level, and they are highly operational and focused on mCHP and industrial CHP.

The so-called mCHP mainly refers to the home and small commercial facilities, the initial power generation is generally about 50kW. Industrial CHP has both natural gas and other primary energy sources and is suitable for tiles, bricks, paper mills, chemicals and pharmaceuticals, plastics and rubber industries.

The contradiction between distributed generation and grid must be solved as soon as possible. EU countries have generally solved the problem of grid-connected generation of distributed energy, which is an important condition for its development. There is a certain contradiction between China's distributed energy generation and the current power grid operating system. A poor solution will greatly hinder the development of distributed energy.

There are two main reasons: First, the vested interests of the power sector will be affected. The power sector, for the sake of its own interests, will not develop its own competitors, nor will it consciously “actively promote” the construction of distributed energy; second, China’s implementation of the classification of electricity price system, there is a certain amount of cross-subsidies, industrial and commercial users electricity prices High, residential electricity prices are low, and residential customers are subsidized by charging high prices for industrial and commercial users. Actively constructing distributed energy systems is generally a high-cost industrial and commercial user. Under the current electricity price mechanism, the development of distributed energy power generation will seize the high-quality customers of grid companies and squeeze the profits of grid companies, making it difficult to achieve coordinated development with the grid. .

Therefore, we should learn from the EU's energy management model, take effective legal and administrative measures, coordinate power, gas, municipal, fire and other departments, rationalize the system, and coordinate the development of distributed energy.

The policy of distributed energy industry needs to follow up on the status quo and broad prospects of the development of distributed energy in the European Union as a result of policy incentives. Drawing on its experience, China's natural gas distributed energy development incentive policy should also focus on the following aspects in particular on the basis of the Guidance Opinions:

Relevant policies for encouraging and subsidizing operability should be introduced as soon as possible. The EU's incentive policy is specific. Enterprises and consumers enjoying subsidies, and the amount and duration of subsidies have clear rules. On the other hand, China has successively introduced some policies and regulations on distributed energy development in recent years. However, most of these terms and conditions only provide some principled regulations, and there are few supporting and subsidy policies, and the operability is not strong. For instance, in the “Guidance Opinions”, certain investment incentives or interest subsidies for natural gas distributed energy projects have also been proposed, which are required to comply with the “Notice on Promotion of VAT, Business Tax, and Corporate Income Tax Policies for Energy-Saving Service Industries” (Finance [2010]. No. 110) Natural gas distributed energy projects that are required, can enjoy relevant tax incentives, and require gas suppliers to give price discount terms. The key to the proposal is to focus on a wide range of issues and it is difficult to implement them.

At present, it is very urgent to implement policies that reduce the investment level of distributed energy units. According to relevant information, the purchase cost of prime movers for distributed energy projects in Shanghai accounted for more than 70% of the total investment of the project, and all of them depended on imports. Import taxes and fees accounted for about 30% of purchase costs. From the overall perspective of the distributed energy projects currently put into operation, the investment per kW is generally as high as 15,000 to 18,000 yuan, and the investment recovery period is generally higher than 10 years. Efforts should be made to adopt policies to reduce or exempt relevant import taxes and fees, otherwise it would be difficult for investors to gain market attraction.

Increase technical investment and focus on technological integration innovation. In fact, many of the EU's supportive policies described above are financial support for companies and research institutes to develop distributed energy technologies. China's introduction of distributed energy technologies and project development will take several years. There are almost no core technologies. More than 90% of equipment is imported and 10% of non-imported units rely on foreign countries. Therefore, it is necessary to increase technical input, promote the combination of production, learning, research, and use, establish an effective research and development mechanism, strengthen the research and verification of core technologies, promote the transformation of achievements, and increase investment in basic and applied research of distributed energy. To closely track the development of cutting-edge technologies in the world, strengthen exchanges and cooperation, and enhance technological innovation capabilities.

While strengthening independent innovation, we must pay attention to the integrated innovation of imported technology. This includes not only improving equipment, but also optimizing the system topology and parameters, taking thermodynamic analysis and system integration optimization as the starting point, and changing the irrationality of high energy use and low use. The energy use model enables the scientific energy use principle of “temperature counterparts and cascade utilization”.

Cultivate a highly specialized industry consulting and design team. Distributed energy is a technology-intensive industry. China must quickly catch up with the technological level of the developed countries. To form a certain scale, we must build a highly specialized industry consulting and design team, or it may be difficult to achieve the desired results. In the process of design and construction, if the equipment configuration is unreasonable and the operation mode is unreasonable, there is a strong possibility that energy saving and environmental protection effects are not significant.

In addition, under the principle of power grid-connected but not connected to the Internet (even if Internet access is allowed, under the current pricing system, the small-and-medium-sized natural gas combined cooling, heating and power systems do not have any advantages), in order to ensure the distribution of small and medium-sized natural gas distributed energy systems. Economics often require designers to fully understand the municipal conditions surrounding the site. The hourly cold, heat and electric load characteristics of the typical day of each season and the characteristics of the generator set are known for analysis of the supply range. At present, many domestic design departments cannot meet this requirement. Therefore, small and medium-sized gas distributed energy stations are different from conventional thermal power plants or thermal stations of general buildings. General power design institutes and industrial design institutes have insufficient experience. It is recommended that governments at all levels should strongly support the development of energy services with specialized personnel. Companies, engineering companies or design consultancies, formulate relevant procedural standards, etc.

EU's policies for distributed energy development draw on Germany: "priority prices" for distributed generation

Germany's distributed energy has a leading position in Europe, among which mCHP fueled by natural gas also occupies a considerable proportion. Germany's policy support for mCHP is relatively complex, reflected in many aspects: First, in the Cogeneration Act, it is stipulated that mCHP implements the “priority price method” for the sale of electricity to the public power grid: small-scale cogeneration facilities (<50kW) are put into operation. Within 10 years, each kWh will enjoy a subsidy of 5.11 Euro cents according to law. In addition, since the mCHP saves transmission costs, it rewards 0.15 to 0.55 cents per kilowatt hour. Second, it stipulates in the energy tax law that as long as it can show that the energy efficiency of mCHP exceeds 70% per year, it can enjoy the tax rebate rate. 0.55 cents; third is to accelerate the introduction of 50kW mCHP equipment in the market, introduced a stimulus plan, the Ministry of the Environment will provide 4 million euros of financial support during the 10 years. The plan adopts a grading basic funding method, which implements a subsidy of 1,550 EUR/kW for the initial 4 kW of electricity generation and a subsidy of 50 EUR/kW for 25 kW to 50 kW. In addition, the equipment meets the NOx and CO2 emission standards and rewarded funding can also be obtained.

In the past few decades, several large power companies and transmission grid operators have been dominating the German electricity market. They have adopted strategic pricing to limit the development of decentralized generation and municipal power generation industries. Although incentive policies and legislation so far have had little impact on industrial CHP, in order to achieve the promise of addressing climate change, new incentive policies and legislative measures will surely be introduced. From a technical perspective, the share of the decentralized energy system in the power generation market in the future may exceed 50%, and industrial CHP will account for a larger share.

Italy: The government promotes energy conservation certification and guides companies to undertake their obligations The Italian government encourages mCHP and industrial CHP. The most important mechanisms are the White Paper certificate and the Green Paper certificate. The Green Paper certificate is for the promotion of renewable energy equipment, while the White Paper certificate stipulates the annual obligations of large Italian local electricity and natural gas distribution system operators in primary energy saving and the installation plan for distributed energy (DG)/mCHP equipment. Improve energy efficiency. The White Certificate is a tool that verifies and verifies the energy saving achieved by the energy distribution system operators themselves or by energy service companies and energy research projects. White certificates are divided into three types: Type 1 (power saving), Type 2 (seasonal), and Type 3 (other fuel savings). Each certificate represents a primary energy source saving 1 tonne of oil equivalent. Relevant entities can purchase white certificates from the market and they will be rewarded when they successfully perform their duties.

The Italian government's DG/mCHP plan includes: Rewarding electricity to the public grid to enjoy preferential prices. The on-grid tariff is 50% higher than the residential retail price. Therefore, the project investment return period is only 3 to 4 years. At the same time, distributed energy projects provide preferential conditions in terms of energy tax and credit, and provide subsidies to users who use mCHP. In addition, if related companies provide funds to support users to install more efficient distributed energy devices, they can recoup their investment through the management of the devices themselves.

Netherlands: Government promotes corporate leadership The Dutch government promotes the implementation of mCHP through its SmartGas energy company. The company signed a letter of intent with the government in January 2007 and plans to install 10,000 sets of cogeneration equipment, which will receive 10 million euros from the government. funds. In addition, the Netherlands also carried out other activities related to mCHP, such as the mCHP energy label (HRe tag), large-scale mCHP field testing, and determining the mCHP grid effect.

The United Kingdom: on one hand grasping emission reduction obligations on the one hand and subsidies on follow-up In the UK, distributed energy accounts for only 7% of the electricity market, but there are about 82,000 mCHP installations. The main measures taken by the UK industry and government to promote the development of mCHP equipment are: First, carbon emission reduction targets (CERT): The government requires all energy companies to undertake CERT obligations to reduce carbon emissions and energy consumption; energy companies can partially subsidize mCHP equipment The cost is to reduce the cost of consumers; second is to develop the mCHP efficiency measurement program (PAS67). If mCHP technology is used to increase energy conservation by 50%, enterprises can obtain government credit; thirdly, the installation of mCHP equipment will be reduced by 5% of value-added tax; It is the government's plan for smart metering that supports households using mCHP equipment to generate electricity and can sell electricity to power companies.

In the early 1990s, the British government actively promoted industrial distributed CHP technology and accumulated more than 2 billion pounds of investment. At present, the British CHP Association is working closely with the government to study and identify new initiatives to help start the development of more industrial CHPs.