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A bi-level multi-objective optimization model for cross-provincial transfer fees to promote cooperation in renewable energy consumption

Author

Listed:
  • Zhen, Juntao
  • Zhao, Laijun
  • Wang, Chenchen
  • Cheng, Youfeng
  • Yi, Hongru
  • Wang, Ke

Abstract

Under the guidance of peak carbon and neutrality goals and driven by its energy transition strategy, China introduced a renewable energy consumption responsibility mechanism. However, provinces currently act independently regarding electricity consumption, making it difficult to simultaneously reduce the costs of their renewable energy consumption responsibility weights (CRWs) while increasing electricity revenue. To solve this problem, we constructed a bi-level multi-objective cross-provincial renewable energy consumption transfer fees model (CTFM), in which the central government is the upper level and provincial governments are the lower level. The leader sets the prices for renewable energy consumption transfer fees to minimize the total cost caused by the CRWs and maximize electricity revenue within the cooperative region. Followers then respond to the leader's transfer fees by optimizing their electricity consumption strategies to reduce the cost of their CRW and increase electricity revenue. The model is solved using bi-level programming combined with a relaxation approach and is applied to a cooperative region comprising Beijing, Shandong, Hebei, and Inner Mongolia. Compared with the independent approach, a transfer price of 0.351 CNY/kWh allowed the CTFM to reduce the fulfillment cost by 206.869 × 10^8 CNY (13.785 %) and increase electricity revenue by 1779.845 × 10^8 CNY (5.718 %). Sensitivity analysis showed how variations in provincial green electricity generation affected costs and revenues. Our results provide a reference for Chinese provinces to formulate cooperative electricity consumption strategies that balance costs and benefits, thereby promoting a green and low-carbon transition in the power sector.

Suggested Citation

  • Zhen, Juntao & Zhao, Laijun & Wang, Chenchen & Cheng, Youfeng & Yi, Hongru & Wang, Ke, 2026. "A bi-level multi-objective optimization model for cross-provincial transfer fees to promote cooperation in renewable energy consumption," Utilities Policy, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:juipol:v:98:y:2026:i:c:s095717872500222x
    DOI: 10.1016/j.jup.2025.102107
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    References listed on IDEAS

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