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 challenges, and must evolve. One of the key solutions is to promote distributed energy systems.
Although the concept of distributed energy has gained recognition from central to local levels, its implementation in China remains challenging. Many projects have struggled to achieve their intended impact, with a significant number being abandoned or underutilized. As Xu Xiaodong noted in an interview, these projects have failed to deliver on their promises of energy efficiency and emission reduction.
The core issue, according to Xu, lies in the need for an open energy network. Without it, the full potential of distributed energy cannot be realized. Feng Zhen, general manager of Beijing Ennet Energy Technology Co., Ltd., highlighted another major barrier: the current monopolistic structure of China’s power grid. Due to the control of the two major power companies and the fixed pricing mechanisms for grid connection and electricity sales, distributed energy producers are unable to compete fairly. Their electricity often cannot be sold at competitive prices, and they miss out on preferential feed-in tariffs that would reflect their environmental benefits.
Xu further pointed out that the industry widely acknowledges the challenges in connecting distributed power sources and the distorted pricing structures. These issues stem from the high level of market concentration and regulatory barriers. Although the *Electricity Law* permits multiple entities to generate and sell electricity, the dominance of the power grid and government-controlled pricing have stifled many entrepreneurs' ambitions to develop their own energy sources.
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 "Opinions on Doing a Good Job on Distributed Power Grid Service Work." This marked an important expansion of its grid connection services, extending them to all types of distributed energy sources—not just photovoltaic systems.
Moreover, the development of smart grids offers a promising path forward. 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 in the IoT sector. Analysts believe that with strong support from local governments, investments in electricity distribution and consumption could surpass market expectations.
In January of this year, Premier Li Keqiang also called for smart grids to not only serve large users but also leverage information technology to promote the growth of small-scale, distributed energy systems. This signals a broader shift toward a more flexible and inclusive energy future.
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