Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Podcast

How China’s Power Grid Really Works

Rob and Jesse break down China’s electricity generation with UC San Diego’s Michael Davidson.

Xi Jinping.
Heatmap Illustration/Getty Images

China announced a new climate commitment under the Paris Agreement at last month’s United Nations General Assembly meeting, pledging to cut its emissions by 7% to 10% by 2035. Many observers were disappointed by the promise, which may not go far enough to forestall 2 degrees Celsius of warming. But the pledge’s conservatism reveals the delicate and shifting politics of China’s grid — and how the country’s central government and its provinces fight over keeping the lights on.

On this week’s episode of Shift Key, Rob and Jesse talk to Michael Davidson, an expert on Chinese electricity and climate policy. He is a professor at the University of California, San Diego, where he holds a joint faculty appointment at the School of Global Policy and Strategy and the Jacobs School of Engineering. He is also a senior associate at the Center for Strategic and International Studies, and he was previously the U.S.-China policy coordinator for the Natural Resources Defense Council.

Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University.

Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, YouTube, or wherever you get your podcasts.

You can also add the show’s RSS feed to your podcast app to follow us directly.

Here is an excerpt from our conversation:

Robinson Meyer: Your research and other people’s research has revealed that basically, when China started making capacity payments to coal plants, in some cases, it didn’t have the effect on the bottom line of these plants that was hoped for, and also we didn’t really see coal generation go down or change in the year that it happened. It wasn’t like they were paying these plants to stick around and not run. They were basically paying these plants, it seems like, to do the exact same thing they did the year before, but now they also got paid. And maybe that was needed for their economics, we can talk about it.

Why did coal get those payments and not, say, batteries or other sources of spare capacity, like pumped hydro storage, like nuclear? Why did coal, specifically, get payments for capacity? And does it have to do with spinning reserve? Or does it have to do with the political economy of coal in China?

Michael Davidson: When it came out, we said exactly the same thing. We said, okay, this should be a technology neutral payment scheme, and it should be a market, not a payment, right? But China’s building these things up little by little. Over time we’ve seen, historically, actually, a number of systems internationally started with payments before they move to markets because they realize that you could get a lot more competitive pressure with markets.

The capacity payment scheme for coal is extremely simple, right? It says, okay, for each province, we’re going to say what percentage of our benchmark coal investment costs are we going to subsidize. It’s extremely simple. It does not account for how much you’re using it at a plant by plant level. It does not account for other factors, renewables, etc. It’s a very coarse metric. But I wouldn’t say that it had had some, you know, perverse negative effect on the outcome of what coal generation is. Probably more likely is that these payments were seen, for some, as extra support. But then for some that are really hurting, they’re saying, okay, well then we will maybe put up less obstacles to market reforms.

But then on top of that, you have to put in the hourly energy demand growth story and say, okay, well you have all these renewables, but you don’t have enough storage to shift to evening peaks. You are going to rely on coal to meet that given the current rigid dispatch system. And so you’re dispatching them kind of regardless of whether or not you have the payment schemes.

I will say that I was a skeptic, right? Because when people told me that China should put in place a capacity market, I said, China has overcapacity. So if you have an overcapacity situation, you put in place a market, the prices should be zero. So what’s the point? But actually, when you’re looking out ahead with all of this surplus coal capacity that you’re trying to push down, you’re trying to push those capacity factors of those coal plans from 50%, 60%, down to 20% or even lower, they need to have other revenue schemes if you’re not going to dramatically open up your spot markets, which China is very hesitant to do — very risk averse when it comes to the openness of spot markets, in terms of price gaps. So that’s a necessary part of this transition. But it can be done more efficiently, and it should done technology neutral.

And by the way that is happening in certain places. That’s a national scheme, but we actually see that the implementation — for example, Shaanxi province, we have a technology neutral scheme that would include other resources, not just coal.

Mentioned:

China’s new pledge to cut its emissions by 2035

What an ‘ambitious’ 2035 electricity target looks like for China

China’s Clean Energy Pledge is Clouded by Coal, The Wire China

Jesse’s upshift; Rob’s upshift.


This episode of Shift Key is sponsored by …

Hydrostor is building the future of energy with Advanced Compressed Air Energy Storage. Delivering clean, reliable power with 500-megawatt facilities sited on 100 acres, Hydrostor’s energy storage projects are transforming the grid and creating thousands of American jobs. Learn more at hydrostor.ca.

A warmer world is here. Now what? Listen to Shocked, from the University of Chicago’s Institute for Climate and Sustainable Growth, and hear journalist Amy Harder and economist Michael Greenstone share new ways of thinking about climate change and cutting-edge solutions. Find it here.

Music for Shift Key is by Adam Kromelow.

You’re out of free articles.

Subscribe to access Heatmap’s expert analysis of climate change, clean energy, and sustainability. Save $57 on an annual subscription, just $156 $99/year.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Climate

Orange Skies Are Back

Where is the smoke worst, where will it go next, and what causes that color?

An orange sky.
Heatmap Illustration/Getty Images

Before wildfire smoke turns the skies to a jaundiced yellow-gray, it might look almost pretty. Midday light grows diffuse, taking on a crepuscular golden hue. Shadows soften and stretch long. The sunsets are particularly incredible: radiant, neon red.

But as with oleander and poison dart frogs, beautiful things are often the most dangerous. The same wildfire particulates that scatter the light will, once dense enough, turn the air around you orange, then black. They will get into your lungs — slipping past your nose hairs and mucus, the body’s defenses that stop larger particulates — and provoke your immune system into an attack. The tiny air sacs at the ends of the bronchioles in your lungs, where the gas exchange of “breathing” actually happens, will become inflamed. You will become short of breath. You will cough. The smallest smoke particulates may even enter your bloodstream.

Keep reading...Show less
Yellow
Climate

Why Heat Waves Are Tricky Killers

Deciding what counts as a heat death is more difficult than it sounds.

Tombstones and a thermometer.
Heatmap Illustration/Getty Images

Just last month, a heat wave killed an estimated 2,700 people in France. Think about that for a second: 2,700 people. That’s equivalent to the mortality of two Hurricane Katrinas or 10 Hurricane Sandys. In France, where there were roughly 970 murders in 2024, the heat wave killed more people in two weeks than almost three years’ worth of homicides.

But unlike floods, hurricanes, tornadoes, or murders, heat doesn’t leave behind much of a crime scene. Although heat kills people in obvious, direct ways like heat stroke, it also puts enormous strain on our hearts and kidneys as our bodies work to keep our internal temperature at 98.6 degrees Fahrenheit. Heart attacks spike during heat waves because vasodilation diverts blood to the skin’s surface to cool it down, in the process lowering blood pressure and forcing the heart to work harder and faster to circulate oxygen. Deaths from renal diseases also jump during periods of high temperatures due to severe dehydration and restricted blood flow to the kidneys.

Keep reading...Show less
AM Briefing

PJM Maxes Out

On America’s thorium progress, Google’s solar buy, and Chinese nuclear

Power lines.
Heatmap Illustration/Getty Images

Current conditions: Canadian wildfires smoke has returned to the Northeast United States, worsening air quality across the region • Catastrophic 1-in-1,000-year floods devastated Missouri’s Black River region, right as intense rainfall is headed for Texas • Temperatures in Beijing are set to drop by nearly 10 degrees Fahrenheit after roasting at nearly 100 degrees yesterday.

THE TOP FIVE

1. PJM’s latest auction lands at the price cap

PJM Interconnection just released the results of its latest capacity auction for 2028 to 2029, and the nation’s largest grid system maxed out its prices yet again. The clearing price hit its cap of $325 per megawatt-day, all while PJM failed to line up enough supply to meet its incoming demand with a sufficient margin of safety. “These auction results show that demand for electricity continues to grow faster than electricity supply,” PJM CEO David Mills said in a statement. “At the same time, PJM recognizes how this supply-and-demand imbalance impacts the reliability of the system and costs for consumers. We are working with government and industry leaders on multiple fronts to restore that balance by bringing on new generation as fast as possible and managing the growth of new load on the grid.” But Julia Kortrey, the director of strategic initiatives for state-level programs at the climate advocacy group Evergreen, said PJM had just “delivered more bad news for people already struggling with higher energy bills,” and accused the grid operator of slow-walking “cheap, clean energy that could lower bills.”

Keep reading...Show less
Yellow