New Edition of “Two Regulations” Released in Northwest China Region


Recently, the Northwest China Energy Regulatory Bureau officially released the long-awaited updated editions of the Regulations for Operations and Management of Grid-Connected Power Stations in Northwest Regions and Regulations for Ancillary Services Management of Grid-Connected Power Stations, often referred to as the “Two Regulations.”  At the Energy Storage West Forum last August, representatives from the Northwest China Energy Regulatory Bureau gave a brief introduction to the revisions.  Below is a summary of their comments from the forum:

The “Two Regulations” were originally enacted in October 2015 and have been in place now for three years.  The release of these regulations was met with much enthusiasm.  In the first half of 2018, the five provinces in the northwest grid were penalized 1.7 billion RMB, compensated 2.77 billion RMB, and showed a service cost allocation/split of 1.16 billion RMB.  These proportions represent the largest of any grid.  From an operations standpoint, not all provinces are the same.  One example is Qinghai province.  As of May 2018, penalties to the Qinghai power grid totaled 85.3 million RMB, with their AGC project responsible for the largest portion of these penalties at 52.99%.  Primary frequency response provided the highest portion of compensation of any project, at 50%.

Revisions to the “Two Regulations” began in 2017.  The reasons for the revisions were based on a few different factors.  First, we wished to increase content on safety in light of new national and industry standards.  Second, we wished to create equal obligations and rights.  The previous regulations focused primarily on the penalization system for renewable energy, with little focus on compensation.  The new regulations make an effort to place importance both on penalization and compensation.  Third was the desire to increase management of peak shaving, including adapting and revising regulations to meet the needs of ancillary services marketization across different provinces.

Currently, there are a few different ways in which the “Two Regulations” relates to energy storage in ancillary services.  First is in peak shaving.  Each province with a peak shaving market has different standards for providing compensation, though when storage is used solely for peak shaving, the rate of return on the initial investment is slow.  Second is in AGC frequency regulation.  In practice, the Northwest power grid leads thermal power plants to invest in AGC based on the frequency of the T&D lines and does not use a model similar to the Huabei Power Grid’s kd value to calculate contributions, instead penalizing or compensating based on a power credit system.  Third is the operations management for renewable energy.  Because the capacity of renewables in the grid continues to grow, dispatch and operations for renewable energy must be improved in order to guarantee system safety, stability, and the maximum use of renewable power.  Renewable energy power stations that contribute to the grid should also receive appropriate compensation.  With these revisions enacted, we will provide a transitional period, allowing renewable energy companies time to adjust to the updates and meet system operation needs.

Author: CNESA Research