Demand-Side Rules in China to Boost Efficiency and Slow Power Plant Construction
New national demand-side management (DSM) regulations in China, in effect as of Jan. 1, 2011, call for power grid companies to achieve electricity savings using DSM amounting to at least 0.3 percent in sales volume and 0.3 percent in maximum load compared with their previous year.
This may usher in a new set of tools, approaches, and programs for energy management to incentivize energy efficiency in buildings and the industrial sector – and as a result delay the construction of some coal-fired power plants. To support implementation, a DSM fund will be created from differentiated pricing, government budget allocation, and construction fees.
Beyond the specific DSM targets, the regulations require power companies to change their planning approach, requiring conservation as a first strategy in capacity planning, which has been dominated by supply-side discussion. Integrating demand-side planning can mitigate the need for new generation in China, where some 30 GW of coal-fired power plants were under construction in 2010.
The new DSM regulation provides an opportunity for provincial authorities to create innovative tools and programs that combine supply and demand solutions to meet China’s growing demand for power.
The Issue Brief explores the DSM regulations in detail.