The substitution of fossil fuels for renewables in the electricity mix of China: From the perspectives of generation, capacity, and demand

In response to the challenges posed by climate change and national energy security, renewable energy has achieved leapfrog development in China. However, its rapid expansion has not brought about a decrease in fossil-fueled (thermal) power generation yet. This paper attempts to find deep evidences from the influences of installed capacity and electricity demand characteristics on the substitution between power generation. Specifically, using Chinese provincial panel data, three ARDL-ECM models are established to study the substitution effects in both short and long run, and following points are revealed: (1) The substitution effect of thermal power generation for intermittent renewables (wind and solar PV power) is greater than that for hydropower in long-run. Wind-solar combination would be a promising alternative to thermal power resources. (2) The solar PV installed capacity has less effect on decreasing thermal power generation than wind power. Hydropower's backup role for intermittent renewables is limited, while the stable flexible thermal power still serves as the main reserve force. (3) Peak load and electricity supply pressure are two barriers to intermittent renewables, while consumption intensity has positive effect in long-run. In addition, this paper estimates the impacts of carbon dioxide emissions and electricity price on renewable power as well.