Role of Pumped Hydro Storage in China’s Power System Transition

Liqun Peng, Gang He and Jiang Lin

Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series from Department of Agricultural & Resource Economics, UC Berkeley

Abstract: China has pledged to peak its carbon emissions by 2030 and achieve carbon neutrality by 2060. Decarbonizing the power system is key to achieving these targets. Pumped hydropower storage (PHS) can play a crucial role in greening China’s power system, by providing both short- and long-term energy storage, facilitating the integration of renewable energy, and maintaining grid stability. It's critical to evaluate the role of PHS in a power system with a high penetration of renewable energy sources and the amount of PHS needed to support the stability and reliability of a decarbonized power system. Our results indicate that the current PHS target (120 GW) is sufficient to balance the electricity supply and demand in the foreseeable future. However, the capacity of battery storage will witness a substantial increase between 2025 and 2050, emerging as a more economical solution to address the variability of renewable energy and accommodate demand growth. This study suggests that over-investment in PHS could lead to unnecessary electricity price inflation. Introducing market competition through an open and competitive bidding process for PHS development can more effectively control project costs and, consequently, electricity tariffs.

Date: 2024-02-08
New Economics Papers: this item is included in nep-cna, nep-ene and nep-env
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