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Costs and benefits of renewable energy development in China's power industry

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  • Liang, Yuanyuan
  • Yu, Biying
  • Wang, Lu

Abstract

China's power sector has become the largest contributor to China's carbon emissions because of its coal-dominated power structure. Replacing fossil fuels with renewable energy is an effective way to reduce carbon emissions and, therefore, a series of targets for renewable electricity generation have been put forward in national plans. However, how these targets will be reached is unclear. This paper uses a Long-range Energy Alternative Planning system (LEAP) model to explore the optimum development path of China's power sector from 2015 to 2050, taking into consideration the impacts of the renewable energy targets. Three scenarios are designed to examine the costs and benefits of developing renewable energy and improving the technologies for renewable power generation, comprising a base scenario, a renewable energy policy scenario and a technological progress scenario. The results show that the power generation cost would increase by at least 2.31 trillion RMB and that CO2 emissions would be reduced by 35.8 billion tonnes during 2015–2050 if power generation follows current planning. Furthermore, every 1% increase in the capacity factors of renewable electricity would on average result in the cumulative CO2 emissions decreased by 979 million tonnes and average CO2 abatement cost decreased by 5.56 RMB/tCO2 during 2015–2050. Based on this study, several policy implications are proposed for the development of power sector in China. Firstly, government may reconsider the current planning for gas-fired power and nuclear power to reach low-carbon electricity generation. Secondly, adjusting the carbon price can offset the additional cost of renewable electricity generation. Thirdly, promoting advanced technologies to match renewable electricity generation can obtain greater economic and environmental benefits. Finally, from the perspective of development potential, reducing the costs of solar power would be the emphasis at this stage.

Suggested Citation

  • Liang, Yuanyuan & Yu, Biying & Wang, Lu, 2019. "Costs and benefits of renewable energy development in China's power industry," Renewable Energy, Elsevier, vol. 131(C), pages 700-712.
  • Handle: RePEc:eee:renene:v:131:y:2019:i:c:p:700-712
    DOI: 10.1016/j.renene.2018.07.079
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    2. Xie, Pinjie & Yang, Fan & Mu, Zhuowen & Gao, Shuangshuang, 2020. "Influencing factors of the decoupling relationship between CO2 emission and economic development in China’s power industry," Energy, Elsevier, vol. 209(C).
    3. Xu, Weiwei & Zhou, Dan & Huang, Xiaoming & Lou, Boliang & Liu, Dong, 2020. "Optimal allocation of power supply systems in industrial parks considering multi-energy complementarity and demand response," Applied Energy, Elsevier, vol. 275(C).
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    6. Chang, Kai & Wan, Qiong & Lou, Qichun & Chen, Yili & Wang, Weihong, 2020. "Green fiscal policy and firms’ investment efficiency: New insights into firm-level panel data from the renewable energy industry in China," Renewable Energy, Elsevier, vol. 151(C), pages 589-597.
    7. Wang, Kai-Hua & Su, Chi-Wei & Lobonţ, Oana-Ramona & Moldovan, Nicoleta-Claudia, 2020. "Chinese renewable energy industries’ boom and recession: Evidence from bubble detection procedure," Energy Policy, Elsevier, vol. 138(C).

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