Energy Transition Research Institute

China Power Futures and Economic Costs

China’s plans for a “strong, smart grid” undercut its economic and environmental goals. Energy efficiency technologies provide the most cost effective means for satisfying China’s growing electricity demand. Yet the utility sector ignores energy efficiency and focuses almost exclusively on building ultra-high voltage transmission lines from remote power supplies to demand centers. We used Entri’s China Grid Model to generate scenarios for meeting China’s growing electricity demand based on various technology and policy choices. We conclude that the emphasis on a “strong” grid will perpetuate the use of expensive, destructive supply options. We find that the lack of emphasis on a “smart,” efficient grid could waste as much as 500 billion RMB by 2020. All supply-focused scenarios cost more than the efficiency scenario. Enforceable efficiency mandates, economic restructuring, and an independent power planning agency could save China a lot of money in the near- and long-term.

Entri’s analysis also suggests a larger role for natural gas in reducing China’s carbon emissions. Combined deployment of natural gas and energy efficiency has the most potential to reduce carbon emissions by 2040, and falling natural gas prices could make this a cost-effective scenario as well.