LI MIN/CHINA DAILY Structural reform and institutional restructuring are key to renewable energy development Since the implementation of the Renewable Energy Law in 2003 and subsequent strengthening of policy support, China's renewable energy sector has seen rapid development and made remarkable achievements. China accounted for 26.94 percent of global renewable energy consumption in 2019. The use of renewable energy has helped China significantly reduce its carbon dioxide emissions. China generated 2.02 trillion kilowatt-hours of renewable energy in 2019, and resulted in 1.65 billion tons of gross avoided CO2 emissions. The cost of wind and photovoltaic (PV) power generation has dropped dramatically, prompting the government to withdraw subsidies at an accelerated pace. In fact, PV and wind-generated electricity can now be connected to the State grid at parity price in most regions, so subsidies for PV power generation and onshore wind-generated electricity were withdrawn by the end of 2020. During the 13th Five-Year Plan (2016-20) period, renewable energy generation grew steadily beyond the set target. The original goal was 675 million kW of renewable installed capacity by the end of 2020, including 340 million kW of hydropower, 210 million kW of wind power, 105 million kW of PV power, 5 million kW of solar power and 15 million kW of biomass power. Apart from solar power, which failed to reach the target, and wind power, which just met the target, the growth of other renewables beat their targets. Although China is the largest producer and consumer of renewable energy, the share of renewables in its total energy mix is still not large enough. In 2019, renewables accounted for 25.3 percent of China's primary energy consumption, which means China still has a long way to go to achieve the goal of carbon neutrality. In this regard, some important issues need proper handling. Currently, wind power and PV power generation have a higher curtailment ratio, which refers to power generated but cannot be connected to the grid due to various reasons. China's energy transition is in the initial stage, and wind power and PV power generation do not account for a high proportion of power generation. However, in recent years, the curtailment ratio for wind power and PV power generation has become a common phenomenon. According to data from the National Energy Administration, China's curtailed wind power rates in 2017 was 12 percent and its PV power curtailment rate was 6 percent. In 2018, China's Clean Energy Consumption Action Plan (2018-20) put forward the goal of reducing the curtailment rates for wind power and PV power generation to 5 percent in 2020. Their curtailment rates have since dropped significantly. In 2018 and 2019, the curtailed wind power rate dropped to 6.2 percent and 4 percent, and the PV power curtailment rate dropped to 3 percent and 2 percent, respectively. According to the experience of major European countries, when wind power and PV power generation account for more than 10 percent of power generation, their curtailment rates will drop below 1 percent. Wind and PV power generation accounted for only 8.4 percent of China's total power generation in 2019, but their curtailment rates were still as high as 3 percent and 2 percent. In other words, China "wasted" 14.5 billion kWh of wind power in 2019. To enhance the flexibility of the power system, China should accelerate the construction of the power spot market and auxiliary service market. With the advancement of low-carbon transition, the proportion of wind and PV power in the power system has increased, and flexibility has become the most scarce "resource" of the power system. The flexibility of the power system includes technical flexibility and institutional flexibility. Technical flexibility refers to the use of technical means to improve the system's ability to respond to production and load fluctuations and the speed of response, and institutional flexibility refers to the power market system that enables power market participants to reflect this response according to price changes. Germany and other European countries did not have sustained wind-solar power rationing rates when the proportion of wind-solar power increased significantly, which benefited from the construction of the single power market based on the grid interconnection of European countries. Most of the problems in the grid-connected renewable energy generation in China are closely related to the lagging construction of its power market. A sound power market includes a power spot market and a auxiliary service market, which can fully reflect the value of the "service" provided by power market participants (generators, grids, auxiliary service providers, etc.), and the power system can operate stably and efficiently. As more and more volatile participants with power generation enter the national power market, the value of the "services" provided by traditional market participants to the stable and efficient operation of the national power system needs to be reassessed. At the same time, the substantial increase in the proportion of wind and PV power generation has created demand for new auxiliary services. It is necessary to further accelerate the construction of China's power spot market and auxiliary service market. Only in this way will we provide a reliable system for the rapid and stable development of China's renewable energy in the 14th Five-Year Plan (2021-25) and in the future. The author is director of Energy Economics Department of the Institute of Industrial Economics at the Chinese Academy of Social Sciences. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.