[SMM Hydrogen Energy Policy Express] National Energy Administration: Innovate the Development Model of New Energy to Support Green Economic and Social Development

Recently, the National Development and Reform Commission (NDRC) and the National Energy Administration jointly issued the Notice on Promoting the Orderly Development of Direct Green Electricity Connection (hereinafter referred to as the Notice), which clarifies the specific requirements for developing direct green electricity connection projects from five aspects: scope of application, planning guidance, operation management, pricing mechanisms, and organizational safeguards.

I. Defining the Scope of Application for Direct Green Electricity Connection

In recent years, there have been preliminary explorations into direct green electricity connection both domestically and overseas. European countries such as Denmark, the Czech Republic, Estonia, Latvia, and Lithuania have successively introduced policies and regulations related to direct connection lines. In 2021, China's 14th Five-Year Plan for Renewable Energy Development proposed the construction of a batch of demonstration factories and parks for direct green electricity supply, as well as the implementation of high-proportion new energy demonstration projects for power generation, supply, and consumption. However, there is currently no unified and clear standard for the definition of direct green electricity connection both domestically and overseas. The Notice clearly defines the scope of application for direct green electricity connection, specifying that it refers to the supply of green electricity from new energy sources such as wind power, solar power, and biomass power to a single power user through direct connection lines without directly connecting to the public power grid. From a technical perspective, direct green electricity connection can be categorized into two types: grid-connected and off-grid. For grid-connected projects, the power supply should be connected to the user side at the property rights demarcation point between the user and the public power grid, ensuring that the entire project is connected to the public power grid as a whole. Compared with power supply forms such as the public power grid and various incremental distribution networks, direct green electricity connection projects enable clear physical traceability of the supplied electricity, better meeting enterprises' needs for green energy consumption and enhancing the local consumption of new energy.

II. Strengthening the Management of Direct Green Electricity Connection Projects

The development of direct green electricity connection projects involves multiple aspects such as planning, operation, and the market. To achieve an organic unity of systematicness, sustainability, and fairness, project management must be carried out in a solid and meticulous manner. The Notice sets out clear requirements in the aforementioned aspects.

In terms of planning, firstly, it is necessary to distinguish between existing and incremental loads to standardize project construction requirements. This involves encouraging the construction of new energy projects alongside new loads, while also leaving policy windows for existing loads such as export-oriented enterprises with rigid carbon reduction needs and those supplied by captive power plants, fully reflecting the support for direct green electricity connection projects and the flexibility of the policies. Secondly, it is essential to strengthen overall planning to ensure orderly development, adhering to the principle of "one chessboard" for new energy development, energy and power, and territorial spatial planning. This includes clarifying the requirements for project connection voltage levels and mandating that projects be constructed and put into operation simultaneously according to an integrated plan. Thirdly, it is encouraged to promote the diversification of investment entities through model innovation. Support is given for different entities to invest in the power supply and load of direct green electricity connection projects, with the load serving as the primary responsible entity. Various business entities, including private enterprises (excluding power grid enterprises), are encouraged to invest in direct green electricity connection projects.

In terms of operation, first, the operation mode of green electricity direct-connection projects will be determined based on the progress of market-oriented reforms. To fully leverage price signals to guide the optimized operation of green electricity direct-connection projects while minimizing the impact on the public power grid, the Notice specifies that the type and installed capacity of new energy power supplies will be determined in accordance with the principle of "determining the source based on the load." Only projects in regions where spot cargo operates continuously are allowed to feed electricity back to the public power grid. The upper limit of the proportion of the project's on-grid electricity to the total available power generation is generally not to exceed 20%. Considering electricity curtailment, the proportion of self-generated and self-consumed electricity to the available power generation should be no less than 60%. The proportion of self-generated and self-consumed electricity of the project to the total electricity consumption should be no less than 30%, and no less than 35% before 2030. Second, the internal resource coordination and optimization of green electricity direct-connection projects will be strengthened to enhance system friendliness. Internal resources should be observable, measurable, adjustable, and controllable, and connected to the load management system or power dispatching automation system as required, accepting the management of the corresponding dispatching agency. Grid-connected projects should fully enhance their flexible regulation capabilities through reasonable configuration of ESS, tapping into the potential for flexible load regulation, and other means, thereby minimizing system regulation pressure.

In terms of the market, the direction of market-oriented reforms in the power sector will be adhered to, promoting grid-connected green electricity direct-connection projects to participate in the power market transactions as a whole. Green electricity direct-connection projects will enjoy equal market status, arrange production based on market transaction results, and settle accounts according to the exchange power with the public power grid.

III. Clarify the Main Responsibilities of Relevant Parties in Each Link of Direct-Connection Projects

Clarifying the economic, technical, and safety responsibility boundaries between green electricity direct-connection projects and the public power grid is a key link in supporting the development of green electricity direct-connection projects and achieving their implementation and operation. The Notice clearly defines the responsibility boundaries in accordance with the principles of safety priority and equal rights and responsibilities.

In terms of economics, green electricity direct-connection projects are required to reasonably pay relevant fees, including transmission and distribution fees, system operation fees, policy-based cross-subsidies, government funds, and surcharges. Localities are not allowed to reduce or exempt relevant fees in violation of national regulations.

In terms of technology, green electricity direct-connection projects should be equipped with various secondary equipment such as relay protection. The grid-related performance of internal facilities should meet relevant standards. The internal power generation, plant power consumption, self-generated and self-consumed electricity, ESS, and other gateways should have the conditions for separate and bidirectional metering. The public power grid should provide fair and non-discriminatory grid access services to projects that meet grid-connection conditions, using the project's access point as the reference point for metering and settlement, and conducting electricity bill settlement as required.

In terms of safety, grid-connected green electricity direct-connection projects and the public power grid form a clear and definite safety responsibility interface based on the property rights demarcation point, with each party fulfilling its corresponding power safety risk management and control responsibilities within the safety responsibility interface. The green electricity direct connection project should strictly implement various safety production management measures, promptly carry out risk control and hidden danger investigation and governance, independently declare grid connection capacity based on the internal power balance situation, and ensure proper internal power generation and load regulation. The public power grid should fulfill its power supply responsibilities in accordance with the declared capacity of the project and relevant agreements.