Title | Economic and environmental benefits of market-based power-system reform in China: provincial versus regional grid optimization |
Publication Type | Report |
Year of Publication | 2019 |
Authors | Nikit Abhyankar, Jiang Lin, Xu Liu, Froylan Sifuentes |
Date Published | 08/2019 |
Keywords | China, CO2 emissions, Dispatch modeling, Power Market reforms, Southern grid |
Abstract | China, whose power system accounts for about 13% of global energy-related CO2 emissions, has begun implementing market-based power-sector reforms. This paper simulates power system dispatch in China’s Southern Grid region and examines the economic and environmental impacts of market-based operations. We find that market-based operation can increase efficiency and reduce costs in all Southern Grid provinces—reducing wholesale electricity costs by up to 35% for the entire region relative to the 2016 baseline. About 60% of the potential cost reduction can be realized by creating independent provincial markets within the region, and the rest by creating a regional market without transmission expansion. The wholesale market revenue is adequate to recover generator fixed costs; however, financial restructuring of current payment mechanisms may be necessary. Electricity markets could also reduce the Southern Grid’s CO2 emissions by up to 10% owing to more efficient thermal dispatch and avoided hydro/renewable curtailment. The benefits of regional electricity markets with expanded transmission likely will increase as China’s renewable generation increases. |
LBNL Report Number | LBNL-2001352 |
Economic and environmental benefits of market-based power-system reform in China: provincial versus regional grid optimization
Related Files