IDEAS home Printed from https://ideas.repec.org/a/eee/renene/v191y2022icp796-806.html

Benefit evaluation and mechanism design of pumped storage plants under the background of power market reform - A case study of China

Author

Listed:
  • He, YongXiu
  • Liu, Yang
  • Li, MoXing
  • Zhang, Yan

Abstract

Pumped storage plant can help promote the low-carbon transformation of China's power system because of its fast response and energy time shift. Based on the pumped storage electricity price mechanism and conforming to the construction law of China's spot power market, this paper established a life cycle benefit evaluation model of pumped storage plant through different market stages, and the evaluation results can provide decision-making reference for investors and national policy makers. Through the life cycle simulation of the pumped storage plant, it is found that the capacity price approved by the government has a downward trend and tends to be stable, and the capacity electricity revenue shows a “U" change trend. The results show that the electricity price connection mechanism designed in this paper can make the pumped storage plant recover costs and obtain reasonable income in the electricity market. When the market mechanism is not perfect, gradually reducing the proportion of the approved capacity price covering the capacity of pumped storage plants will improve the economic benefits of pumped storage plant and help the pumped storage plant to smoothly convert to the status of an independent market subject.

Suggested Citation

  • He, YongXiu & Liu, Yang & Li, MoXing & Zhang, Yan, 2022. "Benefit evaluation and mechanism design of pumped storage plants under the background of power market reform - A case study of China," Renewable Energy, Elsevier, vol. 191(C), pages 796-806.
    • Handle: RePEc:eee:renene:v:191:y:2022:i:c:p:796-806
    DOI: 10.1016/j.renene.2022.03.070
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0960148122003548
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.renene.2022.03.070?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

    for a different version of it.

    References listed on IDEAS

    as
    1. Javed, Muhammad Shahzad & Ma, Tao & Jurasz, Jakub & Amin, Muhammad Yasir, 2020. "Solar and wind power generation systems with pumped hydro storage: Review and future perspectives," Renewable Energy, Elsevier, vol. 148(C), pages 176-192.
    2. Krakowski, Vincent & Assoumou, Edi & Mazauric, Vincent & Maïzi, Nadia, 2016. "Feasible path toward 40–100% renewable energy shares for power supply in France by 2050: A prospective analysis," Applied Energy, Elsevier, vol. 171(C), pages 501-522.
    3. Javed, Muhammad Shahzad & Ma, Tao & Jurasz, Jakub & Canales, Fausto A. & Lin, Shaoquan & Ahmed, Salman & Zhang, Yijie, 2021. "Economic analysis and optimization of a renewable energy based power supply system with different energy storages for a remote island," Renewable Energy, Elsevier, vol. 164(C), pages 1376-1394.
    4. Muche, Thomas, 2009. "A real option-based simulation model to evaluate investments in pump storage plants," Energy Policy, Elsevier, vol. 37(11), pages 4851-4862, November.
    5. Lu, Bin & Blakers, Andrew & Stocks, Matthew & Do, Thang Nam, 2021. "Low-cost, low-emission 100% renewable electricity in Southeast Asia supported by pumped hydro storage," Energy, Elsevier, vol. 236(C).
    6. Tuohy, A. & O'Malley, M., 2011. "Pumped storage in systems with very high wind penetration," Energy Policy, Elsevier, vol. 39(4), pages 1965-1974, April.
    7. Dhakouani, Asma & Znouda, Essia & Bouden, Chiheb, 2019. "Impacts of energy efficiency policies on the integration of renewable energy," Energy Policy, Elsevier, vol. 133(C).
    8. Ming, Zeng & Junjie, Feng & Song, Xue & Zhijie, Wang & Xiaoli, Zhu & Yuejin, Wang, 2013. "Development of China's pumped storage plant and related policy analysis," Energy Policy, Elsevier, vol. 61(C), pages 104-113.
    9. Zhou, P. & Jin, R.Y. & Fan, L.W., 2016. "Reliability and economic evaluation of power system with renewables: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 537-547.
    10. Amaral Lopes, Rui & Grønborg Junker, Rune & Martins, João & Murta-Pina, João & Reynders, Glenn & Madsen, Henrik, 2020. "Characterisation and use of energy flexibility in water pumping and storage systems," Applied Energy, Elsevier, vol. 277(C).
    11. Kong, Yigang & Kong, Zhigang & Liu, Zhiqi & Wei, Congmei & Zhang, Jingfang & An, Gaocheng, 2017. "Pumped storage power stations in China: The past, the present, and the future," Renewable and Sustainable Energy Reviews, Elsevier, vol. 71(C), pages 720-731.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Li, Hongze & Li, Xumeng & Zhang, Yuanyuan & Zhao, Yihang & Pan, Jiaqi & Zhao, Huiru, 2024. "Declaration strategy of wind power and pumped storage participating in the power market considering multiple uncertainties," Energy, Elsevier, vol. 293(C).
    2. Li, Yanbin & Liu, Chang & Wang, Yuan & Xiao, Tingting & Liu, Jiechao & Li, Yun, 2025. "Benefit comprehensive evaluation for pumped storage power station boosting rural revitalization in the surrounding areas in China," Renewable Energy, Elsevier, vol. 238(C).
    3. Tian, Bingying & He, Yongxiu & Zhou, Jinghan & Wang, Bingwen & Wang, Yi & Shi, Wenran, 2023. "Cost-sharing mechanisms for pumped storage plants at different market stages in China," Renewable Energy, Elsevier, vol. 217(C).
    4. Wenhui Zeng & Jiayuan Fan & Zhichao Ren & Xiaoyu Liu & Shuang Lv & Yuqian Cao & Xiao Xu & Junyong Liu, 2023. "Economic Evaluation Method of Modern Power Transmission System Based on Improved Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) and Best-Worst Method-Anti-Entropy Weight," Energies, MDPI, vol. 16(21), pages 1-21, October.
    5. Gao, Chunyang & Wu, Haikun & Li, JiQing & Yu, Xiangyang & Nan, Haipeng & Guo, Pengcheng & Meng, Zhijie & Liu, Weixing & Shen, Shikang, 2025. "Mechanism analysis and suppression strategy of reverse flow phenomenon in variable speed pumped storage units under pump mode," Energy, Elsevier, vol. 325(C).
    6. Yan Lu & Xuan Liu & Yan Zhang & Zhiqiao Yang & Yunna Wu, 2023. "Investment Efficiency Assessment Model for Pumped Storage Power Plants Considering Grid Operation Demand under Fuzzy Environment: A Case Study in China," Sustainability, MDPI, vol. 15(11), pages 1-23, May.
    7. Wei Wang & Yanbin Li & Jinzhong Li & Yun Li, 2024. "Can pumped-storage power stations stimulate rural revitalization? Evidence from the four-party evolutionary game," Journal of Evolutionary Economics, Springer, vol. 34(3), pages 595-645, July.
    8. Huang, Shanshan & Ye, Ze & Huang, Yunxiang, 2025. "Capacity tariff mechanism design for grid-side energy storage in China: A Stackelberg game approach," Utilities Policy, Elsevier, vol. 95(C).
    9. Junyi Yu & Siyang Liao & Jie Zhang, 2025. "Hierarchical Optimization Strategy for Integrated Water–Wind–Solar System Considering Load Control of Electric Vehicle Charging Stations," Energies, MDPI, vol. 18(10), pages 1-23, May.

    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. Mahfoud, Rabea Jamil & Alkayem, Nizar Faisal & Zhang, Yuquan & Zheng, Yuan & Sun, Yonghui & Alhelou, Hassan Haes, 2023. "Optimal operation of pumped hydro storage-based energy systems: A compendium of current challenges and future perspectives," Renewable and Sustainable Energy Reviews, Elsevier, vol. 178(C).
    2. Barbaros, Efe & Aydin, Ismail & Celebioglu, Kutay, 2021. "Feasibility of pumped storage hydropower with existing pricing policy in Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 136(C).
    3. Wang, Huan & Liao, Shengli & Cheng, Chuntian & Liu, Benxi & Fang, Zhou & Wu, Huijun, 2025. "Short-term scheduling strategies for hydro-wind-solar-storage considering variable-speed unit of pumped storage," Applied Energy, Elsevier, vol. 377(PA).
    4. Mingyue Pang & Yan Du & Wenjie Pei & Pengpeng Zhang & Juhua Yang & Lixiao Zhang, 2025. "Pumped Hydro Energy Storage Plants in China: Increasing Demand and Multidimensional Impacts Identification," Energies, MDPI, vol. 18(7), pages 1-14, April.
    5. Rehman, Shafiqur & Al-Hadhrami, Luai M. & Alam, Md. Mahbub, 2015. "Pumped hydro energy storage system: A technological review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 44(C), pages 586-598.
    6. Leonardo Nibbi & Paolo Sospiro & Maurizio De Lucia & Cheng-Cheng Wu, 2022. "Improving Pumped Hydro Storage Flexibility in China: Scenarios for Advanced Solutions Adoption and Policy Recommendations," Energies, MDPI, vol. 15(21), pages 1-25, October.
    7. Simshauser, Paul & Gohdes, Nicholas, 2025. "Incomplete markets, pumped hydro storage and the role of policy in Australia's national electricity market," Energy Policy, Elsevier, vol. 204(C).
    8. Makhdoomi, Sina & Askarzadeh, Alireza, 2020. "Daily performance optimization of a grid-connected hybrid system composed of photovoltaic and pumped hydro storage (PV/PHS)," Renewable Energy, Elsevier, vol. 159(C), pages 272-285.
    9. Durmaz, Tunç, 2016. "Precautionary Storage in Electricity Markets," Discussion Papers 2016/5, Norwegian School of Economics, Department of Business and Management Science.
    10. B. M. Ruhul Amin & Rakibuzzaman Shah & Suryani Lim & Tanveer Choudhury & Andrew Barton, 2025. "Characterization of Energy Profile and Load Flexibility in Regional Water Utilities for Cost Reduction and Sustainable Development," Sustainability, MDPI, vol. 17(8), pages 1-25, April.
    11. Østergaard, P.A. & Lund, H. & Thellufsen, J.Z. & Sorknæs, P. & Mathiesen, B.V., 2022. "Review and validation of EnergyPLAN," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    12. Daniel Icaza & David Vallejo-Ramirez & Carlos Guerrero Granda & Edwin Marín, 2024. "Challenges, Roadmaps and Smart Energy Transition towards 100% Renewable Energy Markets in American Islands: A Review," Energies, MDPI, vol. 17(5), pages 1-27, February.
    13. Ma, Weichao & Vagnoni, Elena & Hu, Jinhong & Lai, Xu & Yang, Jiandong & Zhao, Zhigao, 2025. "Predictions of transient pressure pulsations in a pump-turbine from measurements for enhanced flexible operations," Energy, Elsevier, vol. 335(C).
    14. Behrang Shirizadeh, Quentin Perrier, and Philippe Quirion, 2022. "How Sensitive are Optimal Fully Renewable Power Systems to Technology Cost Uncertainty?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    15. Li, Jidong & Chen, Shijun & Wu, Yuqiang & Wang, Qinhui & Liu, Xing & Qi, Lijian & Lu, Xiuyuan & Gao, Lu, 2021. "How to make better use of intermittent and variable energy? A review of wind and photovoltaic power consumption in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 137(C).
    16. Ardizzon, G. & Cavazzini, G. & Pavesi, G., 2014. "A new generation of small hydro and pumped-hydro power plants: Advances and future challenges," Renewable and Sustainable Energy Reviews, Elsevier, vol. 31(C), pages 746-761.
    17. Alimou, Yacine & Maïzi, Nadia & Bourmaud, Jean-Yves & Li, Marion, 2020. "Assessing the security of electricity supply through multi-scale modeling: The TIMES-ANTARES linking approach," Applied Energy, Elsevier, vol. 279(C).
    18. Carro, A. & Chacartegui, R. & Ortiz, C. & Becerra, J.A., 2022. "Analysis of a thermochemical energy storage system based on the reversible Ca(OH)2/CaO reaction," Energy, Elsevier, vol. 261(PA).
    19. Yang, Jing & Zhang, Zhiyong & Hong, Ming & Yang, Mingwan & Chen, Jiayu, 2020. "An oligarchy game model for the mobile waste heat recovery energy supply chain," Energy, Elsevier, vol. 210(C).
    20. Joel Gilmore & Tim Nelson & Tahlia Nolan, 2023. "Firming Technologies to Reach 100% Renewable Energy Production in Australia’s National Electricity Market (NEM)," The Energy Journal, , vol. 44(6), pages 189-210, November.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    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:renene:v:191:y:2022:i:c:p:796-806. 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/renewable-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.