The World Bank’s board of executive directors has approved a grant worth $7.3 million from the Global Environment Facility (GEF) to promote the scale-up of distributed renewable energy in China.
Distributed renewable energy technologies allow renewable energy to be used at source for consumption or grid stabilization, thereby reducing the need to transport renewable energy across vast distances between the point of production and the centers of demand.
The potential for distributed renewable energy is closely associated with the growth in battery storage capacity.
Both together are expected to make major contributions to emission reductions but are still considered technically risky, lack developed business models and require accompanying regulatory changes to deliver their full impact.
The GEF grant will provide support for piloting and regulatory technical assistance to address these challenges.
China has set targets for increasing the share of non-fossil sources in total energy consumption to 15% by 2020, 20% by 2030 and more than 50% by 2050.
Clean energy transition
The growth of renewable energy has already contributed to the growth in the share of non-fossil fuel energy from 8.6% in 2010 to 14% in 2018. China now has the largest hydropower, wind, solar PV, and geothermal capacity of any country.
However, China’s capacity is used inefficiently and often faces curtailment as grid capacity is limited.
In this context distributed renewable energy has great potential to further improve the country’s energy mix.
“This GEF project will help China harness the potential of its clean energy transition. The global community will also benefit from the avoided greenhouse emissions as a result of the project,” said Song Yanqin, World Bank senior energy specialist and task team leader of the project.
The GEF Distributed Renewable Energy Scale-Up Projectwill support selected studies in the area of planning, grid access, pricing, market design, and business models to inform the development of policies and regulations at the national and provincial levels and finance pilots in specific locations such as a city, a district or an industrial park to demonstrate the financial, institutional and business-model viability for scale-up.
Subgrants will be awarded to government agencies, industry associations, companies, or other eligible actors.
This project will be implemented in parallel with the China Renewable Energy and Battery Storage Project under preparation for World Bank financing.