IDEAS home Printed from https://ideas.repec.org/a/eee/energy/v284y2023ics0360544223017929.html
   My bibliography  Save this article

Trading behavior strategy of power plants and the grid under renewable portfolio standards in China: A tripartite evolutionary game analysis

Author

Listed:
  • Teng, Minmin
  • Lv, Kunfeng
  • Han, Chuanfeng
  • Liu, Pihui

Abstract

China is facing the challenge of selecting appropriate policies to implement tradable green certificate (TGC) under the renewable portfolio standards (RPS). This paper proposes a tripartite evolutionary game model among thermal power plants, green power plants and the grid under the RPS and TGC policy to analyze the evolutionary stability strategies (ESSs) of unilateral subjects and systems and use numerical simulation to discuss the influence of different types of TGC purchase ratios and different trading markets on the choice of tripartite strategy. The results are as follows. (1) When the renewable energy consumption quota ratio is 21%, thermal power plants are more and more active in choosing to trade TGC as the ratio of wind power TGC and photovoltaic TGC gradually increases from 1:5 to 5:1. (2) In the TGC market where the price of wind power and photovoltaic TGC is 50 yuan, green power plants are more inclined to hold TGC; in the subsidized TGC market, where the price of wind power TGC is 190 yuan and the price of photovoltaic TGC is 650 yuan, green power plants tend to sell TGC. (3) With the price of excess green electricity consumption gradually decreased from 700 yuan/MWh to 100 yuan/MWh, the activity of three parties participating in TGC trading gradually increased, effectively activating the TGC market. Finally, from the perspective of policy management, we provide suggestions for the long-term sustainable development of the TGC market.

Suggested Citation

  • Teng, Minmin & Lv, Kunfeng & Han, Chuanfeng & Liu, Pihui, 2023. "Trading behavior strategy of power plants and the grid under renewable portfolio standards in China: A tripartite evolutionary game analysis," Energy, Elsevier, vol. 284(C).
    • Handle: RePEc:eee:energy:v:284:y:2023:i:c:s0360544223017929
    DOI: 10.1016/j.energy.2023.128398
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0360544223017929
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.energy.2023.128398?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Daniel Friedman, 1998. "On economic applications of evolutionary game theory," Journal of Evolutionary Economics, Springer, vol. 8(1), pages 15-43.
    2. Wang, Yadong & Wang, Delu & Shi, Xunpeng, 2021. "Exploring the dilemma of overcapacity governance in China's coal industry: A tripartite evolutionary game model," Resources Policy, Elsevier, vol. 71(C).
    3. Chunning Na & Can Jin & Huan Pan & Lixia Ding, 2022. "Green Power Trade Behavior in China’s Renewable Portfolio Standard: An Evolutionary Game-Based System Dynamics Approach," Sustainability, MDPI, vol. 14(9), pages 1-12, April.
    4. Berry, Trent & Jaccard, Mark, 2001. "The renewable portfolio standard:: design considerations and an implementation survey," Energy Policy, Elsevier, vol. 29(4), pages 263-277, March.
    5. Samuelson, Larry & Zhang, Jianbo, 1992. "Evolutionary stability in asymmetric games," Journal of Economic Theory, Elsevier, vol. 57(2), pages 363-391, August.
    6. Zhu, Chaoping & Fan, Ruguo & Lin, Jinchai, 2020. "The impact of renewable portfolio standard on retail electricity market: A system dynamics model of tripartite evolutionary game," Energy Policy, Elsevier, vol. 136(C).
    7. Zhou, Shan & Solomon, Barry D., 2020. "Do renewable portfolio standards in the United States stunt renewable electricity development beyond mandatory targets?," Energy Policy, Elsevier, vol. 140(C).
    8. Janet Ruiz-Mendoza, Belizza & Sheinbaum-Pardo, Claudia, 2010. "Electricity sector reforms in four Latin-American countries and their impact on carbon dioxide emissions and renewable energy," Energy Policy, Elsevier, vol. 38(11), pages 6755-6766, November.
    9. Liu, Liwei & Zong, Haijing & Zhao, Erdong & Chen, Chuxiang & Wang, Jianzhou, 2014. "Can China realize its carbon emission reduction goal in 2020: From the perspective of thermal power development," Applied Energy, Elsevier, vol. 124(C), pages 199-212.
    10. Zeng, Lijun & Wang, Jiafeng & Zhao, Laijun, 2022. "An inter-provincial tradable green certificate futures trading model under renewable portfolio standard policy," Energy, Elsevier, vol. 257(C).
    11. Upton, Gregory B. & Snyder, Brian F., 2015. "Renewable energy potential and adoption of renewable portfolio standards," Utilities Policy, Elsevier, vol. 36(C), pages 67-70.
    12. Boots, M., 2003. "Green certificates and carbon trading in the Netherlands," Energy Policy, Elsevier, vol. 31(1), pages 43-50, January.
    13. Abolhosseini, Shahrouz & Heshmati, Almas, 2014. "The main support mechanisms to finance renewable energy development," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 876-885.
    14. Washburn, C. & Pablo-Romero, M., 2019. "Measures to promote renewable energies for electricity generation in Latin American countries," Energy Policy, Elsevier, vol. 128(C), pages 212-222.
    15. Xin-gang Zhao & Yu-zhuo Zhang & Yan-bin Li, 2018. "The Evolution of Renewable Energy Price Policies Based on Improved Bass Model: A System Dynamics (SD) Analysis," Sustainability, MDPI, vol. 10(6), pages 1-20, May.
    16. Song, Xiao-hua & Han, Jing-jing & Zhang, Lu & Zhao, Cai-ping & Wang, Peng & Liu, Xiao-yan & Li, Qiao-chu, 2021. "Impacts of renewable portfolio standards on multi-market coupling trading of renewable energy in China: A scenario-based system dynamics model," Energy Policy, Elsevier, vol. 159(C).
    17. Liu, Qiang & Shi, Minjun & Jiang, Kejun, 2009. "New power generation technology options under the greenhouse gases mitigation scenario in China," Energy Policy, Elsevier, vol. 37(6), pages 2440-2449, June.
    18. Wȩdzik, Andrzej & Siewierski, Tomasz & Szypowski, Michał, 2017. "Green certificates market in Poland – The sources of crisis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 490-503.
    19. Hu, Yu & Chi, Yuanying & Zhou, Wenbing & Li, Jialin & Wang, Zhengzao & Yuan, Yongke, 2023. "The interactions between renewable portfolio standards and carbon emission trading in China: An evolutionary game theory perspective," Energy, Elsevier, vol. 271(C).
    20. Zeng, Lijun & Du, Wenjing & Zhang, Wencheng & Zhao, Laijun & Wang, Zhaohua, 2023. "An inter-provincial cooperation model under Renewable Portfolio Standard policy," Energy, Elsevier, vol. 269(C).
    21. Luo, Shihua & Hu, Weihao & Liu, Wen & Zhang, Zhenyuan & Bai, Chunguang & Huang, Qi & Chen, Zhe, 2022. "Study on the decarbonization in China's power sector under the background of carbon neutrality by 2060," Renewable and Sustainable Energy Reviews, Elsevier, vol. 166(C).
    22. Shrimali, Gireesh & Tirumalachetty, Sumala, 2013. "Renewable energy certificate markets in India—A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 26(C), pages 702-716.
    23. Sarasa-Maestro, Carlos J. & Dufo-López, Rodolfo & Bernal-Agustín, José L., 2013. "Photovoltaic remuneration policies in the European Union," Energy Policy, Elsevier, vol. 55(C), pages 317-328.
    24. Zhang, Qi & Wang, Ge & Li, Yan & Li, Hailong & McLellan, Benjamin & Chen, Siyuan, 2018. "Substitution effect of renewable portfolio standards and renewable energy certificate trading for feed-in tariff," Applied Energy, Elsevier, vol. 227(C), pages 426-435.
    25. Tan, Jinjing & Pan, Weiqi & Li, Yang & Hu, Haoming & Zhang, Can, 2023. "Energy-sharing operation strategy of multi-district integrated energy systems considering carbon and renewable energy certificate trading," Applied Energy, Elsevier, vol. 339(C).
    26. Zhao, Xiaoli & Ma, Qian & Yang, Rui, 2013. "Factors influencing CO2 emissions in China's power industry: Co-integration analysis," Energy Policy, Elsevier, vol. 57(C), pages 89-98.
    27. Fang, Debin & Zhao, Chaoyang & Kleit, Andrew N., 2019. "The impact of the under enforcement of RPS in China: An evolutionary approach," Energy Policy, Elsevier, vol. 135(C).
    28. Schoemaker, Paul J H, 1982. "The Expected Utility Model: Its Variants, Purposes, Evidence and Limitations," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 529-563, June.
    29. Tan, Qinliang & Ding, Yihong & Zheng, Jin & Dai, Mei & Zhang, Yimei, 2021. "The effects of carbon emissions trading and renewable portfolio standards on the integrated wind–photovoltaic–thermal power-dispatching system: Real case studies in China," Energy, Elsevier, vol. 222(C).
    30. Hustveit, Magne & Frogner, Jens Sveen & Fleten, Stein-Erik, 2017. "Tradable green certificates for renewable support: The role of expectations and uncertainty," Energy, Elsevier, vol. 141(C), pages 1717-1727.
    31. Siddiqui, Afzal S. & Tanaka, Makoto & Chen, Yihsu, 2016. "Are targets for renewable portfolio standards too low? The impact of market structure on energy policy," European Journal of Operational Research, Elsevier, vol. 250(1), pages 328-341.
    32. Fugui Dong & Lei Shi & Xiaohui Ding & Yuan Li & Yongpeng Shi, 2019. "Study on China’s Renewable Energy Policy Reform and Improved Design of Renewable Portfolio Standard," Energies, MDPI, vol. 12(11), pages 1-23, June.
    33. Sun, Peng & Nie, Pu-yan, 2015. "A comparative study of feed-in tariff and renewable portfolio standard policy in renewable energy industry," Renewable Energy, Elsevier, vol. 74(C), pages 255-262.
    34. Kevin Currier & Yanming Sun, 2014. "Market Power and Welfare in Electricity Markets Employing Tradable Green Certificate Systems," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 20(2), pages 129-138, May.
    35. Bunn, Derek & Yusupov, Tim, 2015. "The progressive inefficiency of replacing renewable obligation certificates with contracts-for-differences in the UK electricity market," Energy Policy, Elsevier, vol. 82(C), pages 298-309.
    36. Dong, Zhuojia & Yu, Xianyu & Chang, Ching-Ter & Zhou, Dequn & Sang, Xiuzhi, 2022. "How does feed-in tariff and renewable portfolio standard evolve synergistically? An integrated approach of tripartite evolutionary game and system dynamics," Renewable Energy, Elsevier, vol. 186(C), pages 864-877.
    37. Helgesen, Per Ivar & Tomasgard, Asgeir, 2018. "An equilibrium market power model for power markets and tradable green certificates, including Kirchhoff's Laws and Nash-Cournot competition," Energy Economics, Elsevier, vol. 70(C), pages 270-288.
    38. Yu, Xianyu & Ge, Shengxian & Zhou, Dequn & Wang, Qunwei & Chang, Ching-Ter & Sang, Xiuzhi, 2022. "Whether feed-in tariff can be effectively replaced or not? An integrated analysis of renewable portfolio standards and green certificate trading," Energy, Elsevier, vol. 245(C).
    39. Safarzadeh, Soroush & Hafezalkotob, Ashkan & Jafari, Hamed, 2022. "Energy supply chain empowerment through tradable green and white certificates: A pathway to sustainable energy generation," Applied Energy, Elsevier, vol. 323(C).
    40. Barbose, Galen & Bird, Lori & Heeter, Jenny & Flores-Espino, Francisco & Wiser, Ryan, 2015. "Costs and benefits of renewables portfolio standards in the United States," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 523-533.
    41. Liu, Tong & Xu, Gang & Cai, Peng & Tian, Longhu & Huang, Qili, 2011. "Development forecast of renewable energy power generation in China and its influence on the GHG control strategy of the country," Renewable Energy, Elsevier, vol. 36(4), pages 1284-1292.
    42. He, Jiankun & Deng, Jing & Su, Mingshan, 2010. "CO2 emission from China's energy sector and strategy for its control," Energy, Elsevier, vol. 35(11), pages 4494-4498.
    43. Zhao, Xiaofan & Ortolano, Leonard, 2010. "Implementing China's national energy conservation policies at state-owned electric power generation plants," Energy Policy, Elsevier, vol. 38(10), pages 6293-6306, October.
    44. Espey, Simone, 2001. "Renewables portfolio standard: a means for trade with electricity from renewable energy sources?," Energy Policy, Elsevier, vol. 29(7), pages 557-566, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wang, Delu & Li, Chunxiao & Mao, Jinqi & Yang, Qing, 2023. "What affects the implementation of the renewable portfolio standard? An analysis of the four-party evolutionary game," Renewable Energy, Elsevier, vol. 204(C), pages 250-261.
    2. Xin-gang, Zhao & Ling-zhi, Ren & Yu-zhuo, Zhang & Guan, Wan, 2018. "Evolutionary game analysis on the behavior strategies of power producers in renewable portfolio standard," Energy, Elsevier, vol. 162(C), pages 505-516.
    3. Xin-gang, Zhao & Lei, Xu & Ying, Zhou, 2022. "How to promote the effective implementation of China’s Renewable Portfolio Standards considering non-neutral technology?," Energy, Elsevier, vol. 238(PB).
    4. Zhou, Kaile & Yang, Shanlin & Shen, Chao & Ding, Shuai & Sun, Chaoping, 2015. "Energy conservation and emission reduction of China’s electric power industry," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 10-19.
    5. Ying, Zhou & Xin-gang, Zhao & Lei, Xu, 2022. "Supply side incentive under the Renewable Portfolio Standards: A perspective of China," Renewable Energy, Elsevier, vol. 193(C), pages 505-518.
    6. Song, Xiao-hua & Han, Jing-jing & Zhang, Lu & Zhao, Cai-ping & Wang, Peng & Liu, Xiao-yan & Li, Qiao-chu, 2021. "Impacts of renewable portfolio standards on multi-market coupling trading of renewable energy in China: A scenario-based system dynamics model," Energy Policy, Elsevier, vol. 159(C).
    7. Ying, Zhou & Xin-gang, Zhao & Zhen, Wang, 2020. "Demand side incentive under renewable portfolio standards: A system dynamics analysis," Energy Policy, Elsevier, vol. 144(C).
    8. Yu, Xianyu & Ge, Shengxian & Zhou, Dequn & Wang, Qunwei & Chang, Ching-Ter & Sang, Xiuzhi, 2022. "Whether feed-in tariff can be effectively replaced or not? An integrated analysis of renewable portfolio standards and green certificate trading," Energy, Elsevier, vol. 245(C).
    9. Hu, Yu & Chi, Yuanying & Zhao, Hao & Zhou, Wenbing, 2022. "The development of renewable energy industry under renewable portfolio standards: From the perspective of provincial resource differences," Energy Policy, Elsevier, vol. 170(C).
    10. Shangjia Wang & Wenhui Zhao & Shuwen Fan & Lei Xue & Zijuan Huang & Zhigang Liu, 2022. "Is the Renewable Portfolio Standard in China Effective? Research on RPS Allocation Efficiency in Chinese Provinces Based on the Zero-Sum DEA Model," Energies, MDPI, vol. 15(11), pages 1-18, May.
    11. Chunning Na & Can Jin & Huan Pan & Lixia Ding, 2022. "Green Power Trade Behavior in China’s Renewable Portfolio Standard: An Evolutionary Game-Based System Dynamics Approach," Sustainability, MDPI, vol. 14(9), pages 1-12, April.
    12. Fang, Debin & Zhao, Chaoyang & Kleit, Andrew N., 2019. "The impact of the under enforcement of RPS in China: An evolutionary approach," Energy Policy, Elsevier, vol. 135(C).
    13. Yanming Sun & Lin Zhang, 2019. "Full Separation or Full Integration? An Investigation of the Optimal Renewables Policy Employing Tradable Green Certificate Systems in Two Countries’ Electricity Markets," IJERPH, MDPI, vol. 16(24), pages 1-17, December.
    14. Wu, Jiaqian & Chen, Yu & Yu, Lean & Li, Guohao & Li, Jingjing, 2023. "Has the evolution of renewable energy policies facilitated the construction of a new power system for China? A system dynamics analysis," Energy Policy, Elsevier, vol. 183(C).
    15. Shao, Jing & Chen, Huanhuan & Li, Jinke & Liu, Guy, 2022. "An evaluation of the consumer-funded renewable obligation scheme in the UK for wind power generation," Renewable and Sustainable Energy Reviews, Elsevier, vol. 153(C).
    16. Dong, Zhuojia & Yu, Xianyu & Chang, Ching-Ter & Zhou, Dequn & Sang, Xiuzhi, 2022. "How does feed-in tariff and renewable portfolio standard evolve synergistically? An integrated approach of tripartite evolutionary game and system dynamics," Renewable Energy, Elsevier, vol. 186(C), pages 864-877.
    17. Zeng, Lijun & Du, Wenjing & Zhao, Laijun & Zhan, Yanhong, 2023. "An inter-provincial transfer fee model under renewable portfolio standard policy," Energy, Elsevier, vol. 277(C).
    18. Zhang, Libo & Chen, Changqi & Wang, Qunwei & Zhou, Dequn, 2021. "The impact of feed-in tariff reduction and renewable portfolio standard on the development of distributed photovoltaic generation in China," Energy, Elsevier, vol. 232(C).
    19. Kwag, Kyuhyeong & Shin, Hansol & Oh, Hyobin & Yun, Sangmin & Kim, Tae Hyun & Hwang, Pyeong-Ik & Kim, Wook, 2023. "Bilevel programming approach for the quantitative analysis of renewable portfolio standards considering the electricity market," Energy, Elsevier, vol. 263(PD).
    20. Li, Jinke & Liu, Guy & Shao, Jing, 2020. "Understanding the ROC transfer payment in the renewable obligation with the recycling mechanism in the United Kingdom," Energy Economics, Elsevier, vol. 87(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:energy:v:284:y:2023:i:c:s0360544223017929. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.