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Research on the participation behavior of renewable energy in China's sustainable development price settlement mechanism: An agent-based simulation analysis

Author

Listed:
  • Han, Jian
  • Zhou, Ying
  • Weng, Yuyan
  • Huang, Junling

Abstract

China's sustainable development pricing settlement mechanism provides a risk-hedging tool for renewable energy market entry. However, this mechanism excludes benefits from other medium and long-term contracts and green certificates. This will create issues regarding the choice of how renewable energy enters the market. Therefore, analysis the effect of mechanism volume and price to the market participation behavior and the benefit of renewable energy is key to policy refinement. To this end, this paper constructs an agent-based multi-strategy evolutionary game model to examine the strategic evolutionary trends of renewable energy entities under varying mechanism scale constraints. The study also investigates their impacts on entity revenues and the scale of mechanism electricity subsidies. Analytical results reveal that: sufficient mechanism electricity safeguards renewable energy revenues but may escalate subsidy pressure incrementally each year; while reducing mechanism electricity alleviate subsidy pressure, they also lower contract prices for successful bidders, making the exit mechanism or high bidding strategy a more appealing choice for renewables. The study recommends that to boost the growth of renewable energy capacity, sufficient mechanism-based electricity volume should be guaranteed. As renewable energy expands in the future, efforts should be made to gradually reducing mechanism electricity in the future. Policymakers should optimize the formation mechanism for local mechanism electricity price cap and floors to align with electricity market signals, thereby ensuring the basic returns and orderly development of renewable energy.

Suggested Citation

  • Han, Jian & Zhou, Ying & Weng, Yuyan & Huang, Junling, 2026. "Research on the participation behavior of renewable energy in China's sustainable development price settlement mechanism: An agent-based simulation analysis," Energy Policy, Elsevier, vol. 210(C).
    • Handle: RePEc:eee:enepol:v:210:y:2026:i:c:s030142152500549x
    DOI: 10.1016/j.enpol.2025.115042
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