1
Introduction

The United States and China, the biggest energy consumers and carbon emitters in the world, may unlock the potential of renewable power sources and dramatically transform the energy profiles of both countries. In a single day, enough sun shines in China to meet its energy needs for more than 10 years, at least theoretically.1 Wind resources in the central United States could theoretically satisfy more than 16 times the current U.S. demand for electricity (Lu et al., 2009). The ultimate challenge, of course, is to harness these and other clean, abundant resources in a cost-efficient way, which will require not only overcoming temporal, spatial, and energy-conversion limitations, but also integrating them into an electrical infrastructure that was not designed for distributed, variable-output power generation.

The United States and China face similar technical and economic constraints in terms of scaling up renewables’ share of power generation: with the exception of hydropower and some wind and geothermal, most renewable power generation is not presently cost-competitive with baseload rates based on coal-fired power; and geographically, concentrations of electricity demand and high-quality renewable energy resources are far apart. However, renewable power offers several advantages over conventional generation, including low emissions of air pollutants, low fuel costs, and in many cases relatively quick deployment.

Recent efforts in the United States to develop renewable power have been driven by a desire to substantially reduce greenhouse gas (GHG) emissions, improve energy security, and stimulate the domestic economy. China has been

1

This estimate is based on an assumption of annual global radiation of 14.1 million terawatt hours (TWh), or 1.7 trillion tons of coal equivalent (tce), and annual electrical generation of 3,400 TWh.



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1 Introduction The United States and China, the biggest energy consumers and carbon emitters in the world, may unlock the potential of renewable power sources and dramatically transform the energy profiles of both countries. In a single day, enough sun shines in China to meet its energy needs for more than 10 years, at least theoretically.1 Wind resources in the central United States could theoreti- cally satisfy more than 16 times the current U.S. demand for electricity (Lu et al., 2009). The ultimate challenge, of course, is to harness these and other clean, abundant resources in a cost-efficient way, which will require not only overcoming temporal, spatial, and energy-conversion limitations, but also integrating them into an electrical infrastructure that was not designed for distributed, variable-output power generation. The United States and China face similar technical and economic constraints in terms of scaling up renewables’ share of power generation: with the exception of hydropower and some wind and geothermal, most renewable power generation is not presently cost-competitive with baseload rates based on coal-fired power; and geographically, concentrations of electricity demand and high-quality renew - able energy resources are far apart. However, renewable power offers several advantages over conventional generation, including low emissions of air pollut - ants, low fuel costs, and in many cases relatively quick deployment. Recent efforts in the United States to develop renewable power have been driven by a desire to substantially reduce greenhouse gas (GHG) emissions, improve energy security, and stimulate the domestic economy. China has been 1This estimate is based on an assumption of annual global radiation of 14.1 million terawatt hours (TWh), or 1.7 trillion tons of coal equivalent (tce), and annual electrical generation of 3,400 TWh. 5

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6 ThE POWER OF RENEWAbLES pursuing similar goals, under the more general goal of sustainably meeting its growing energy demand and avoiding the environmentally unsustainable trajec - tory followed by many industrialized nations. Working cooperatively to develop and deploy renewable power generation technologies makes strategic sense for both countries. First, the United States and China have a 30-year history of collaborating on renewable energy, although the level of activity has ebbed and flowed. Second, each country has unique strengths that have helped the other achieve its current level of renewable power deploy- ment. U.S. innovations in many key renewable power technologies have influ- enced the industry for decades; China’s manufacturing capacity has brought down the cost of some technologies thus making them more cost competitive. Third, by working together the United States and China have an opportunity to accelerate the deployment of renewable power technologies and substantially reduce GHG emissions, thereby gaining international recognition for their accomplishments. In the past decade, the U.S. and Chinese Academies of Sciences and Engi - neering have jointly conducted and published several bilateral studies on energy and the environment (CAE/NAE/NRC, 2003; NAE/NRC/CAE/CAS, 2007; NRC/ CAS/CAE, 2000; NRC/NAE/CAS/CAE, 2004). These reports have benefitted national policy makers, academic researchers, environmental managers, indus - tries, and local decision makers and have influenced public policy, such as China’s recent decision to pursue a regional air-quality management strategy and to regu - late emissions of ozone and fine particulate matter (PM2.5). In 2008, the four academies agreed to cooperate on the present study on producing and deploying electricity from renewable resources. Since December of that year, expert committees from both countries have held meetings and con- ducted site visits to gain a better understanding of the complex, on-the-ground challenges facing them and as a basis for setting priorities for further coopera - tion between the United States and China, and by extension, the broader, global clean-energy community. Specifically, the committees were charged with providing a report that would (1) assist both countries in developing strategies to meet renewable energy goals, (2) highlight prospects for technology collaboration, and (3) identify areas for future cooperation. In pursuit of these goals, the study includes discussions of the following topics: • a comparative assessment of resource potential for grid-scale electricity generation in China and the United States • near-term market opportunities for mature technologies • priorities for further collaboration, with an emphasis on cost reduction, increased efficiency and grid connectivity, and energy storage In addressing grid-scale electricity generation, the study focuses much atten - tion on three major resources—wind, solar, and biomass—for near-term com -

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7 INTRODUCTION mercial deployment. It also considers resources with a longer time horizon for commercial deployment, such as enhanced geothermal and hydrokinetic power. The study does not, however, consider hydropower or non-electrical applications (chiefly, heating) in any detail, although these are important components of the renewable energy portfolios of both countries. This study builds on the 2009 report Electricity from Renewable Resources: Status, Prospects, and Impediments (NAS/NAE/NRC, 2010a), in which risks and trade-offs were assessed for various energy technologies in the United States; much of the information in that report is also applicable and adaptable to China. In the present report, issues related to trade, intellectual property, and economic competitiveness are identified but not analyzed in depth. Overall, the committees agree that the obstacles to cooperation are not insur- mountable and that both countries would benefit from the results. Even though some competitiveness concerns may have to be addressed, the benefits would far outweigh the costs in time and effort. The committees also note that renewable energy, and U.S.-Chinese rela- tions, are both dynamic fields, making it difficult to keep current with data and developments. This is particularly true with regard to cost data and installed capacity for wind and solar PV. In general, the committees elected to not present historical cost data, but instead to discuss the factors that influence the cost of power generation from renewable resources. Information presented in this report is based on what was available as of mid-2010 and relies heavily on data from official government sources. RESOURCES, TECHNOLOGIES, AND ENVIRONMENTAL IMPACTS In Chapter 2, the committees focus on abundant renewable resources, par- ticularly wind and solar power. China, for example, estimates that its available renewable resources could provide 12–14 million GWh annually (Yan, 2009). However, both countries face significant challenges to deploying their richest resources. In the United States, for example, the most abundant wind resources are on the Great Plains, which is far from major demand centers, or offshore, where aesthetic and other concerns have slowed development. In China, the best wind and solar resources are in high desert regions, also far from demand centers, or in places where there is no electrical grid at all. Biomass (including waste), geothermal, marine, and hydrokinetic resources are also available to both countries. Hydropower has been the predominant source of renewable power for decades, but most of its potential has already been exploited in the United States. China is likely to continue to develop both small and large hydropower stations to meet its energy demands and offset coal consumption, but over time, the share of hydropower in China’s renewable power is expected to shrink.

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8 ThE POWER OF RENEWAbLES Renewable resources in both countries are usually evaluated in isolation, and sometimes less abundant, but more feasible resources are overlooked. Today, the United States is producing higher resolution resource maps (from 5 kilometers [km] × 5 km to 500 meters [m] × 500 m), layering resources and grid infrastruc- ture on regional maps, and developing cost curves to identify economically recov- erable resources. Advances that can encourage regional deployment of renewables and discussions of how China might benefit from improved resource assessments are described in Chapter 2. The focus of Chapter 3 is on the technological readiness of renewable power generation technologies, with an emphasis on near-term, commercially available technologies that are already in use in both countries. This chapter is largely an update of the NAS/NAE/NRC (2010a) report, with an additional discussion of China’s progress in researching and developing various technologies. With the exceptions of concentrating solar power (CSP) and geothermal power, for which the United States has significantly more experience than China, the technolo - gies being developed and deployed are similar. For example, both countries are world leaders in the deployment of wind turbines, the fastest growing renewable. Supporting technologies, such as enhanced grid capabilities and energy storage systems, are also described in Chapter 3. Another focus of activity in both countries is the cost competitiveness of renewable power generation technologies. Because certain externalities, such as emissions of carbon dioxide, are not currently factored into electricity rates, renewables have been at a serious disadvantage in terms of cost (NRC, 2010a). There are opportunities to improve conversion efficiencies and capacity factors for many renewable power generation technologies at the point of manufacturing, and doing so would improve their cost profile. Improving the balance of system components, resource forecasts, and increasing grid connectivity can also bring down the total costs of renewable power generation. These cost reductions are likely to be realized as experience with the deployment of renewables increases. This so-called “organizational learning” provides an opportunity for the United States and China to share information to improve overall system performance. The discussion in Chapter 4 is based on the desire of both countries to reduce environmental impacts, particularly air pollution, from energy consumption, which has long been an important motivation for using renewable energy instead of fossil fuels (e.g., NAE/NRC/CAE/CAS, 2007). As both countries increase their efforts to improve air quality and reduce GHG emissions, the deployment of renewable power technologies is likely to become increasingly important. Life cycle analyses are a valuable way to assess the relative impacts (positive and negative) of dif - ferent generation technologies. Moreover, as individual renewable power plants and requisite manufacturing bases increase in scale, their environmental impacts will also have to be taken into account. Some photovoltaic (PV) manufacturing processes, for example, are energy intensive and produce hazardous waste streams that must be addressed.

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 INTRODUCTION POLICY AND ECONOMIC CONSIDERATIONS Many barriers to accelerating the deployment of renewable power are non- technical and have to do with current energy policies and electricity markets. In Chapter 5, the committees examine this landscape, comparing and contrasting policy approaches in the United States and China. Although policy has been a critical element in sustaining the development of renewables in both countries, for various reasons the United States and China have taken different approaches and offered support at different stages. In general, the U.S. approach has been characterized by tax credits that support project development but not necessarily manufacturing, and state-led initiatives to create markets for renewable power. By contrast, China has enacted national policies and targets to support the devel- opment of renewable energy, most directly through the 2005 Renewable Energy Law, with provincial and local support being directed to encourage manufacturing. However, in practice, some of China’s policies and mandates have not been fully implemented because the detailed rules for implementing the 2005 Renewable Energy Law have yet to be promulgated. Legacy energy policies, regulations, and subsidies are key determinants to the success or failure of clean-energy initiatives and the achievement of renewable- power goals. The most prominent policy in both China and the United States has been price supports, and both countries set subsidy values specific to particular resources (wind, solar, and so forth). In Chapter 5, the committees explore how outcome-based incentives in both countries could help overcome barriers and promote the rapid, sustainable development of renewable power. Energy policies in both countries have placed a high priority on domestic energy security, especially reducing dependence on petroleum, and have only indirectly supported efforts to develop electricity from renewables. However, other advantages of renewable power are sometimes included in national priorities. China, for example, has been quick to embrace the renewables industry as part of a clean-energy economic “pillar.” The United States has been arguably slower to seize that opportunity, although President Obama alluded to it in a speech on the energy revolution: We can hand over the jobs of the future to our competitors, or we can confront what they’ve already recognized as the great opportunity of our time: The nation that leads the world in creating new sources of clean energy will be the nation that leads the 21st-century global economy.2 In Chapter 5, the committees also analyze challenges associated with the commercial deployment of renewable technologies, particularly as these indus - tries mature and increase in scale. The United States and China face a number of 2 May 27, 2009, speech by President Obama at Nellis Air Force Base in Las Vegas, accessed June 2009 at http://www.solarfeeds.com/the-green-market-blog/706-obamas-renewable-energy- reolution-speech.html.

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0 ThE POWER OF RENEWAbLES market and logistical barriers to the commercial deployment of renewable energy. For example, bottlenecks in the supply of some materials, such as steel for wind turbines or polysilicon for PV cells, may temporarily interfere with growth; but they might also spur innovations in resource conservation or the use of alternative materials. In addition, growing renewables industries will require a skilled work - force, both in the manufacturing sector and to meet downstream requirements and training for installation, operation, and maintenance jobs. Finally, despite govern - ment investments in both countries in 2008 and 2009, financial risks continue to hamper investments in the renewables sector. CHALLENGES OF SCALE As is shown in Table 1-1, the effects of scale on the electrical enterprise should not be underestimated. Today, renewables represent a rapidly growing, but still small, share of overall electrical generation. In 2008 China and the United States accounted for 19 percent of the 280 gigawatts (GW) worldwide installed capacity of non-hydro renewable power (REN 21, 2009). To put this in perspec- tive, worldwide generation of all non-hydro renewable power in 2007 (EIA, 2010) could have powered the United States for only six weeks. Considering that the relative contributions of hydropower are expected to decrease over time, the share of wind, solar, and other power resources will have to increase dramatically for renewables to achieve predominant penetration of the market. The overall energy infrastructure and longer term prospects for renewables are the subjects of Chapter 6. In the United States, change is being driven by a desire to reduce GHG emissions, reduce dependence on foreign sources of energy, TABLE 1-1 Installed Capacity and Net Generation from Renewable Resources, 2009 China United States Installed Generation Installed Generation Generation Technology Capacity (GW) (TWh) Capacity (GW) (TWh) Conventional hydropower 196.79 574.7 77.93 272.13 16.13a Wind 26.9 33.54 70.76 0.45b 0.81b Solar PV 0.3 1.25 Solar thermal — — 0.43 Biopower 4.0 20.0 11.35 54.34 Geothermal — — 2.35 15.21 Subtotal 7. 6.05 6.85 4.5 Entire electrical system 874.0 3663.9 1131.58 3953.11 Sources: CEC, 2010; EIA, 2010a-d; NEA, 2010; REN 21, 2010; Sherwood, 2010. a Cumulative, reflecting installations that were completed and brought on-line by the end of 2009. b Data is for grid-connected systems.

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 INTRODUCTION and replace aging infrastructure. China shares the first two concerns, but its main priority is to meet its rapidly increasing demand for electricity while shifting its energy structure to be less reliant on coal. It has taken 125 years to build the U.S. energy infrastructure. China’s infrastructure has developed much more rapidly, based on marginal improvements to the model developed in the United States and other industrialized countries. As both countries look ahead, there will be many opportunities to accelerate development in ways that will bring renewables on line more quickly. COOPERATIVE COMPETITORS The United States and China are entering a pivotal period during which they will be both collaborators on critical global challenges and major participants in the marketplace. Nowhere is this more apparent at the moment than in the areas of energy and climate change. In Chapter 7, the committees review the historical context of U.S.-Chinese cooperation on energy and climate change, the new era of U.S.-Chinese cooperation ushered in by Presidents Hu and Obama, the role of each country in international discussions on energy and climate issues, and how cooperation can be significantly expanded in the coming years. The development of renewable sources of energy is one of the main options for both China and the United States to reduce GHG emissions and promote a sustainable energy future. Although other countries have led the way so far, the United States and China are poised to become the largest markets for renewable energy deployment in the coming years. In 2008, they became the two largest wind power markets in the world, and they are expected to remain so for years to come. The United States is ahead of China in solar deployment, but China is ahead in solar PV production and has recently shown a commitment to expanding domestic use of PV technology. In short, renewable energy is an area in which both the United States and China can lead the world and can benefit from cooperation. Cooperative efforts can lead to significant increases in the scale of renewable energy deployment and associated cost reductions in technology and facilitate a shared commitment to transitioning to a low-carbon economy in the face of global climate change. More comprehensive collaboration can also support the rapid, widespread deployment of renewable sources in both countries. Industrial and economic competition are often barriers to scientific and technology cooperation between the United States and China, and these concerns can only be alleviated through mutual understanding and trust. On balance, U.S.- Chinese cooperation on renewable energy can help build a stronger, more pro - ductive foundation for Chinese-American relations, arguably the most important bilateral relationship in the world.

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