Xu Xiaodong, the director of the Distributed Energy Committee at the China Urban Gas Association, recently emphasized in an article titled *"The Premise of Distributed Energy Development is the Open Network"* that the traditional centralized energy model is facing increasing resource and environmental constraints, making a shift necessary. He highlighted that developing distributed energy is one of the key strategies to address these challenges.
While the concept of distributed energy has gained recognition from central to local levels, the actual implementation in China remains challenging. Many projects have struggled to achieve their intended goals, with a significant number being abandoned or underutilized. As Xu noted in an interview, this has led to poor performance in terms of energy efficiency and emissions reduction.
One of the main obstacles to the growth of distributed energy is the lack of an open grid system. Feng Zhen, general manager of Beijing Ennet Energy Technology Co., Ltd., pointed out that China’s current power grid is dominated by two major companies, which maintain control over pricing and tariffs. This structure makes it difficult for distributed energy sources to compete fairly. Unlike coal-based electricity, distributed energy cannot benefit from preferential feed-in tariffs, even though it contributes to environmental protection and energy savings. These systemic issues continue to hinder large-scale development.
Xu Xiaodong also stressed that the barriers to connecting distributed power to the grid and the distorted pricing mechanisms are widely acknowledged within the industry. These problems stem from a highly concentrated market and strong industry monopolies. Although the *Electricity Law* allows multiple entities to generate power, the dominance of the grid operators and government-set prices have limited opportunities for independent energy producers.
However, there is some positive news. The State Grid Corporation of China has taken steps to facilitate the integration of distributed energy into the grid. In February of this year, the company held a press conference in Beijing and released the *Opinions on Doing a Good Job on Distributed Power Grid Service Work*. This document marks a significant step forward, expanding grid services to all types of distributed power, not just photovoltaic systems. It reflects the company's growing commitment to supporting decentralized energy solutions.
Additionally, the rise of smart grids offers new possibilities for distributed energy. According to the 12th Five-Year Plan for the Internet of Things, the total investment in smart grids during this period is expected to reach 2 trillion yuan, making it one of the top investment areas. Analysts believe that with strong support from local governments, investments in electricity distribution and consumption may exceed expectations.
In January of this year, Premier Li Keqiang called for smart grids to be more inclusive, not only serving large users but also using information technology to promote small-scale, distributed generation systems. This vision aligns with the broader goal of creating a more flexible and sustainable energy future.
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