Scenario Analysis in the Electric Power Industry under the Implementation of the Electricity Market Reform and a Carbon Policy in China

Abstract

In China, electricity market reform was first implemented in 2015. At the same time, the national carbon market was built, along with the electricity industry, which was considered a breakthrough. Some key considerations for the future development of China's electricity system include the implementation of demand-side measures in order to adjust the peak-to-valley difference and the economic dispatch of increasing intermittent renewable energy and traditional energy in the process of power marketization with the implementation of a carbon policy. This paper examines the impact of policies on electricity generation by modelling the evolution process of power marketization and the economic dispatch of generation technologies over a sixteen-year period beginning in 2020. We model four potential influencing factors of government policy: (1) the demand response mode;(2) power marketization process; (3) capacity adjustment of thermal power units; and (4) carbon taxes, which vary in terms of their timing and amount. This model assesses the impact of these influencing factors on the competition between electricity generators using a range of output variables, including generation portfolios, electricity prices, capacity factors, CO 2 emissions, etc. The results show that the new round of electricity market reforms has had a positive impact on renewable energy generation. The influence of carbon policy is evident in the promotion, transformation and elimination of thermal units, and an indirect increase in renewable energy generation.Energies 2019, 12, 2152 4 of 26 is considered, and (4) the power sector pays the carbon cost of thermal power units under the implementation of the carbon market.An illustrative model structure of power generation economic analysis is presented in Figure 1, including the data input, model design scenarios, objective functions and model output. The data input requires data on the detailed composition of the power sector at the beginning of the planning horizon, predicted power demand, future installed capacity development plan, CO 2 prices, as well as the technological and fuel parameters, considered over the planning horizon. The modus of China's future electricity generation is divided into two parts, under electricity marketization, in this model: the first part is the "equal shares" dispatch generation for the planned electricity sector, whereby all types of power generation technologies comply with the "equal shares" electricity generation rules; the second part entails the "economic optimization" dispatch generation for the electricity market sector, which is under an economic optimization algorithm that selects the lowest-cost option for electricity generation. The output of the model can provide detailed information about the pathway of China's power sector under different policy scenarios over the planning horizon, including the power generation profiles, capacity factors of various power generation technologies, market price on an hourly basis, costs and revenues of various generatio...

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