Cost increase in the electricity supply to achieve carbon neutrality in China

TLDR

China’s power sector has set long‑term carbon‑neutrality and renewable‑energy goals, yet the decline in renewable costs is offset by intermittency externalities and large‑scale investments that raise electricity prices. This study develops a power‑system expansion model to evaluate how electricity supply costs evolve during a 30‑year transition to carbon neutrality. The model incorporates detailed renewable supply curves, operating‑security constraints, and generation‑unit characteristics to accurately assess cost variations. Results indicate that achieving carbon neutrality by 2050 requires about 5.8 TW of wind and solar PV, raising supply costs by 9.6 CNY¢/kWh, mainly due to investments in renewables, flexible generation, and network expansion.

Abstract

The Chinese government has set long-term carbon neutrality and renewable energy (RE) development goals for the power sector. Despite a precipitous decline in the costs of RE technologies, the external costs of renewable intermittency and the massive investments in new RE capacities would increase electricity costs. Here, we develop a power system expansion model to comprehensively evaluate changes in the electricity supply costs over a 30-year transition to carbon neutrality. RE supply curves, operating security constraints, and the characteristics of various generation units are modelled in detail to assess the cost variations accurately. According to our results, approximately 5.8 TW of wind and solar photovoltaic capacity would be required to achieve carbon neutrality in the power system by 2050. The electricity supply costs would increase by 9.6 CNY¢/kWh. The major cost shift would result from the substantial investments in RE capacities, flexible generation resources, and network expansion.