Executive Summary

Rapid growth in wind and solar power is fundamentally reshaping resource adequacy risks in China’s power system. Resource adequacy risks are expanding from conventional peak-capacity shortages to ramping constraints during periods of rapid net-load growth and geographic mismatches between supply and demand. In the transition to a new power system, relying primarily on baseload capacity expansion is increasingly inadequate to meet the complex needs of power supply reliability. These changes call for a more granular and transparent approach to resource adequacy planning and assessment. Using Shandong Province as a case study, this report examines resource adequacy under a low-carbon transition, with a focus on large-scale renewable energy deployment and system resilience to extreme disruptions.

This report assesses Shandong’s resource adequacy in 2030 using an hourly unit commitment and economic dispatch (UCED) model. The model represents all 16 prefecture-level cities as individual nodes and simulates four consecutive weeks of summer system operations.

The analysis constructs 16 scenarios based on alternative pathways for four key resources: coal power, energy storage, wind, and solar PV. The coal transition pathway reflects a managed reduction in available coal-fired capacity through a smaller project pipeline, retirement of selected existing units, and reduced power output from extraction-condensing units serving industrial heat demand. The model does not optimize new capacity additions. Given predefined generation and network configurations, it identifies dynamic supply shortfalls using hourly non-served energy (NSE), or unmet electricity demand. In addition, under the comprehensive low-carbon transition scenario, the stress tests examine sustained low-wind and low-solar conditions and outages of major interprovincial high-voltage direct-current (HVDC) import links.

Key Findings

1. Coordinated wind, solar, and storage deployment can maintain resource adequacy as available coal-fired capacity declines

• Under the coal transition pathway, maintaining baseline renewable energy and storage deployment creates significant resource adequacy pressure during summer peak periods. Maximum hourly NSE reaches 6,091 MWh.
• Expanding wind or solar alone reduces the shortfall but does not eliminate it. Solar provides limited support during Shandong’s evening peak, which typically occurs between 8 p.m. and 10 p.m.
• Under the coal transition pathway, when wind, solar, and storage all follow the more ambitious deployment pathways, NSE falls to zero. Coordinated deployment is critical to managing the adequacy risks associated with coal capacity reductions.
• Under extreme weather stress tests, hourly wind and solar availability is reduced to 75% and 50% of the historical baseline, representing sustained compound low-wind and low-solar conditions. The system remains adequate in the 75% case. In the 50% case, local supply risks emerge in Dongying and Rizhao, with maximum hourly NSE reaching 1,825 MWh and 1,429 MWh, respectively.

2. Storage shifts solar generation to evening peak hours and strengthens resilience to import disruptions

• High solar penetration substantially reduces daytime net load, particularly between noon and 2 p.m. Shandong’s summer demand typically peaks in the evening. As solar output declines, the system faces steep ramping requirements and high peak-capacity needs, shifting the greatest resource adequacy pressure to evening hours.

• Expanded storage deployment shifts surplus daytime solar generation to the evening peak, reducing the peak demand that must be served by conventional generation and imported electricity. Storage therefore plays a key role in increasing the effective contribution of solar PV to resource adequacy.

• Interprovincial HVDC outage tests show that supply shortfalls can re-emerge under the comprehensive low-carbon transition scenario when a major import corridor is disrupted. For example, an outage of the Lugu HVDC link results in more than 3,000 MWh of maximum hourly NSE in Weihai. The effects can propagate through power flows across the provincial grid, extending beyond the city hosting the receiving converter station and increasing supply pressure at other nodes, including Dongying.

• Increasing battery storage capacity to 1.2 times the current planning target eliminates the modeled supply shortfalls caused by individual HVDC outages. This result highlights the ability of storage to manage short-duration disruptions and periods of acute system stress. The duration of an HVDC outage remains critical. Prolonged outages may exceed the energy-shifting capability of storage. Storage and interprovincial transmission therefore provide complementary support for system resilience, and their appropriate configuration warrants further study.

3. Power-sector emissions are geographically concentrated, and coal retirement can lead to local emissions rebounds

• Power-sector CO₂ emissions in Shandong are concentrated in a small number of cities, particularly Binzhou, Liaocheng, and Yantai.

• Wind and solar expansion consistently reduces emissions across cities, while the effects of coal retirement vary spatially. When coal capacity declines without sufficient expansion of wind, solar, and storage, total provincial emissions fall. Generation becomes more concentrated among the remaining coal-fired units, causing emissions to increase in some cities, including Liaocheng and Jinan. The operational emissions effects of coal retirement depend on the scale of coal capacity reductions, the availability of low-carbon replacement resources, and the alignment of their output with system demand.

4. High wind and solar deployment places greater demands on storage and renewable integration

• Under the baseline storage development, high wind and solar deployment results in a province-wide curtailment rate of 9%. Curtailment approaches 19% in some cities with high solar capacity and limited storage. More ambitious storage deployment can significantly reduce renewable curtailment.

• Under the baseline coal pathway, further wind and solar expansion increases renewable integration pressure, raising the province-wide curtailment rate to 14%.
  
  

Policy Recommendations

• Establish a transparent rolling resource adequacy assessment framework
  Develop a standardized, model-based RA framework with explicit reliability metrics and stress testing

• Deepen capacity market reform and establish a technology-neutral flexibility incentive framework
  1) Develop a robust capacity accreditation framework
  2) Introduce innovative market products targeting specific flexibility gaps
  3) Promote the coordinated economic evaluation and market-based transition of capacity compensation mechanisms

• Improve spot market design to unlock the value of emerging flexibility resources
  1) Moderately relax overly restrictive spot market price caps and floors
  2) Enhance the role of emerging resources in addressing temporal supply-demand imbalances

• Improve spot market design to unlock the value of emerging flexibility resources
  1) Moderately relax overly restrictive spot market price caps and floors
  2) Enhance the role of emerging resources in addressing temporal supply-demand imbalances