Economic and environmental benefits of market-based power-system reform in China: A case study of the Southern grid system

Abhyankar, Nikit; Lin, Jiang; Liu, Xu; Sifuentes, Froylan

doi:10.1016/j.resconrec.2019.104558

Title: Economic and environmental benefits of market-based power-system reform in China: A case study of the Southern grid system

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.

Authors:

; Lin, Jiang;

; Sifuentes, Froylan

Publication Date:: Sat Feb 01 00:00:00 EST 2020

Research Org.:: Lawrence Berkeley National Lab. (LBNL), Berkeley, CA (United States)

Sponsoring Org.:: USDOE Office of Science (SC)

OSTI Identifier:: 1581864

Alternate Identifier(s):: OSTI ID: 1760212

Grant/Contract Number:: AC02-05CH11231

Resource Type:: Published Article

Journal Name:: Resources, Conservation and Recycling

Additional Journal Information:: Journal Name: Resources, Conservation and Recycling Journal Volume: 153 Journal Issue: C; Journal ID: ISSN 0921-3449

Publisher:: Elsevier

Country of Publication:: Netherlands

Language:: English

Subject:: 29 ENERGY PLANNING, POLICY, AND ECONOMY; China; southern grid; power market reforms; dispatch modeling; CO2 emissions

Citation Formats


                    Abhyankar, Nikit, Lin, Jiang, Liu, Xu, and Sifuentes, Froylan. Economic and environmental benefits of market-based power-system reform in China: A case study of the Southern grid system.  Netherlands: N. p., 2020. 
Web.  doi:10.1016/j.resconrec.2019.104558.

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                    Abhyankar, Nikit, Lin, Jiang, Liu, Xu, & Sifuentes, Froylan. Economic and environmental benefits of market-based power-system reform in China: A case study of the Southern grid system.  Netherlands.  https://doi.org/10.1016/j.resconrec.2019.104558

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                    Abhyankar, Nikit, Lin, Jiang, Liu, Xu, and Sifuentes, Froylan. Sat .  
"Economic and environmental benefits of market-based power-system reform in China: A case study of the Southern grid system".  Netherlands.  https://doi.org/10.1016/j.resconrec.2019.104558.

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@article{osti_1581864,

  title        = {Economic and environmental benefits of market-based power-system reform in China: A case study of the Southern grid system},

  author       = {Abhyankar, Nikit and Lin, Jiang and Liu, Xu and Sifuentes, Froylan},

  abstractNote = {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.},

  doi          = {10.1016/j.resconrec.2019.104558},

  journal      = {Resources, Conservation and Recycling},

  number       = C,

  volume       = 153,

  place        = {Netherlands},

  year         = {Sat Feb 01 00:00:00 EST 2020},

  month        = {Sat Feb 01 00:00:00 EST 2020}

}

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Title: Economic and environmental benefits of market-based power-system reform in China: A case study of the Southern grid system

Abstract

Citation Formats

Where the wind blows journal, November 2009

When Does Regulation Distort Costs? Lessons from Fuel Procurement in US Electricity Generation journal, January 2015

Effects of aggregating electric load in the United States journal, July 2012

Wind Energy and Power System Operations: A Review of Wind Integration Studies to Date journal, December 2009

Do Markets Reduce Costs? Assessing the Impact of Regulatory Restructuring on US Electric Generation Efficiency journal, August 2007

Competition in the British Electricity Spot Market journal, October 1992

Where, when and how much wind is available? A provincial-scale wind resource assessment for China journal, November 2014

Where, when and how much solar is available? A provincial-scale solar resource assessment for China journal, January 2016

China’s electricity switch won’t be swift or painless journal, October 2018

Economic and carbon emission impacts of electricity market transition in China: A case study of Guangdong Province journal, March 2019

The Impact of Balancing Area Size and Ramping Requirements on Wind Integration journal, June 2008

Utility Wind Integration and Operating Impact State of the Art journal, August 2007

Economic dispatch savings in the coal-fired power sector: An empirical study of China journal, August 2018

Where the wind blows
journal, November 2009

When Does Regulation Distort Costs? Lessons from Fuel Procurement in US Electricity Generation
journal, January 2015

Effects of aggregating electric load in the United States
journal, July 2012

Wind Energy and Power System Operations: A Review of Wind Integration Studies to Date
journal, December 2009

Do Markets Reduce Costs? Assessing the Impact of Regulatory Restructuring on US Electric Generation Efficiency
journal, August 2007

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journal, October 1992

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journal, November 2014

Where, when and how much solar is available? A provincial-scale solar resource assessment for China
journal, January 2016

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journal, October 2018

Economic and carbon emission impacts of electricity market transition in China: A case study of Guangdong Province
journal, March 2019

The Impact of Balancing Area Size and Ramping Requirements on Wind Integration
journal, June 2008

Utility Wind Integration and Operating Impact State of the Art
journal, August 2007

Economic dispatch savings in the coal-fired power sector: An empirical study of China
journal, August 2018