Energy Market Policies Initiative

Developing Market Mechanisms to Promote Low Carbon Development in Large and Small Enterprises 

Designing market mechanisms for strengthening the Top-10000 program in China

By partnering with the most influential think tanks in China, this work has provided key central government policy-makers with implementation strategies and policy recommendations for deepening the energy efficiency in China’s largest energy consuming enterprises. Recommendations proposed to the Chinese central government policy-makers focuses on the importance of establishing necessary legal and framework to drive the market development for energy efficiency,  roviding the support enabling development of energy efficiency service markets and institutions, and developing effective governance to supervising the market.

Driving low carbon growth in small-and-medium enterprises (SMEs) through supply chain

The SME sector will likely be a focus of China’s government in the 13th Five-Year Plan (FYP). However, due to the technical, information, and financing barriers facing SMEs, moving these enterprises towards energy efficiency and low carbon development needs strategies that are different from those that have been employed for China’s large, state-owned enterprises. Working with the government and private sector partners, this project designs an innovative model to catalyze energy and water savings and carbon reductions in China through supply chains and by a combination of policy push and market pull. Effective market mechanisms and market risk mitigation strategies are needed to enable greater investment in promoting energy efficiency, water savings, and low carbon development in China’s SMEs.

Technical and Market Innovation to Target Large Sources of Carbon Dioxide Emissions from China’s Industrial Boilers

China’s industrial boiler systems consume 700 million tons of coal annually, accounting for 18% of the nation’s total coal consumption. Together these boiler systems are one of the major sources of China’s greenhouse gas emissions, producing approximately 1.3 gigatons of carbon dioxide (CO2) annually. The China Energy Group has been working with Chinese local pilots and U.S. industrial partners to carry out a multi-year project under the US-China Climate Change Working Group in demonstrating advanced fuel switch solutions and efficiency improvement measures, developing enabling policy, strengthening boiler performance testing codes, and designing effective market mechanisms. The project promotes the technical and market innovation that will replaces the scattered boilers with a community-scale boiler systems and transforms the boiler manufacturers from selling boilers as a product to providing steam/heat as services.   

Boosting China’s Energy Efficiency Market through Energy Performance Contracting

China has the largest Energy Performance Contracting (EPC) market in the world. Chinese energy service companies (ESCOs) typically use a shared energy savings model with a heavy focus on industrial projects. As the market has grown, Chinese companies have seen value in enhancing their projects in several ways, including experimenting with new contract models, third-party financing, and stronger measurement and verification. The China Energy Group has been supporting the U.S. Department of Energy and the U.S. State Department in carrying out a multi-year project under the U.S.-China Climate Change Working Group to work with EPC market players in both the U.S. and China. The ongoing project centers on scaling up EPC capacity building efforts, addressing financing barriers, gathering and evaluating pilot projects, and refining approaches to measuring and verifying results of EPC projects in China.

Advancing Power Sector Reform and Creating Market Opportunities for Demand-Side Energy Resources in China

U.S.-China power consumption, demand, and competition cooperation

China is undergoing dramatic changes in reforming its electricity power sector. Such reform is crucial for a low carbon energy transition. This U.S. State Department project under the U.S.-China Climate Change Working Group will draw on relevant U.S. and Chinese experiences related to renewable energy utilization, demand response, and retail market choices. This project will focus on three pilots: (1) increasing local renewable consumption to tackle the growing renewable curtailment, (2) enhancing program design, market mechanisms, and administration of demand response programs, (3) promoting retail competition/choice. Through sharing experiences and lessons learned, conducting policy dialogues, assessing the issues and challenges, carrying out program designs, and developing joint policy recommendations, this U.S.-China cooperation will help China develop a reliable, resilient, and flexible power system and market in China, which will position China on a trajectory towards accelerated decarbonization. 

Creating market opportunities for demand-side resources

Worldwide, there is a growing use of demand-side resources (DERs) which include but are not limited to customer-side PV, distributed generation (DG), behind-meter energy storage, electric vehicles, and responsive customer loads. The growth of DERs however is facing great challenges, especially in China. The traditional power market structure and utilities operation models do not offer clear and effective signals for customer-side generation devices and responsive loads to respond to the needs of the reliable and optimal grid operations. This not only fails to make DSRs a sustainable resource but also increases the risk to the power grid due to insufficient capability to accommodate multidirectional and intermittent power flow from increasing number of DSR installations. The China Energy Group is developing methodologies and creating models and an optimization tool that enables DSRs to be aggregated and coordinated and allows customers with DSR assets to become prosumers (power production by consumers) and get properly compensated for contributing to the efficient and reliable grid operations. 

Research Lead(s):