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Demand side incentive under renewable portfolio standards: A system dynamics analysis

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  • Ying, Zhou
  • Xin-gang, Zhao
  • Zhen, Wang

Abstract

Renewable Portfolio Standards (RPS) is a mandatory institutional change to realize the low-carbon transformation of energy in China. The success of its implementation depends on the scientific system design. Based on the current situation of the green certificate transaction with the severe shortage of tradable green certificate (TGC) subscription on the demand side of RPS in China and the actual economic situation of the electricity market reform, this paper uses system dynamics to build the market transaction models of benchmark on-grid price and marketed on-grid price respectively, and analyze the incentive effect of the relevant system design of RPS on the demand side of TGC. The results show that: (1) Implementing the marketed on-grid price can effectively stimulate and induce coal power plants to conduct green certificate trading. Compared with benchmark on-grid price, under marketed on-grid price, coal power plants have higher demand for TGC, higher revenue and profit, and better incentive effect. (2)Setting a scientific and reasonable price cap of TGC can effectively stimulate coal power plants to increase the consumption demand of TGC. Therefore, scientific design of the demand-side incentive system of RPS and strengthening of the power market reform will help China to implement the RPS and promote the consumption and utilization of renewable energy.

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  • 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).
    • Handle: RePEc:eee:enepol:v:144:y:2020:i:c:s0301421520303839
    DOI: 10.1016/j.enpol.2020.111652
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