Shifting gears in thermal power: Displacement efficiency and environmental impact of wind and solar generation in China

Abstract

China has made substantial investments in wind and solar power in response to its commitment to addressing climate change. However, the extent to which these intermittent renewable energy sources can displace the predominant thermal generation remains uncertain. Employing two-way fixed-effect panel models, this study finds that from 2011 – 2021, intermittent renewable generation displaced thermal generation by crowding out the annual operating hours of thermal power. Furthermore, the environmental impact analysis suggests that, despite the emission reduction benefits brought about by wind and solar generation through phasing out inefficient units and promoting investments in efficient units, their intermittent nature and inadequate alignment with the increasing electricity demand led to reduced emission reduction efficiency. These findings indicate a transition of thermal power from baseload to dispatchable, emphasizing the importance of tailored investment plans based on the characteristics of wind and solar and the necessity of alternative measures to enhance grid flexibility.