IDEAS home Printed from https://ideas.repec.org/a/eee/renene/v215y2023ics096014812300811x.html
   My bibliography  Save this article

Effect of market structure on renewable energy Development—A simulation study of a regional electricity market in China

Author

Listed:
  • Zhao, Xiaoli
  • Sun, Chuyu
  • Zhong, Zewei
  • Liu, Suwei
  • Yang, Zili

Abstract

To achieve the carbon-neutral goal set for 2060, China has promoted renewable energy development for more than two decades. Meanwhile, China's electricity market is undergoing a new round of reform by introducing more market-oriented mechanisms and changing the market structure. This paper investigates the impact of three electric utility market structures experimented with in China on promoting renewable energy through a simulation model. The three market structures are vertical monopoly, weak monopoly (separation of power generators and grids), and monopolistic competition (Cournot-Nash competition). The model is calibrated with the actual data of the regional utility network in Beijing, Tianjin, and Tangshan areas. The simulation results show that the electricity market structure plays a vital role in renewable electricity, and the competition among utilities tends to benefit renewable energy development (wind power here). The study's conclusions are helpful to our understanding of further reforms in the electric utility industry and the long-term clean energy target in China.

Suggested Citation

  • Zhao, Xiaoli & Sun, Chuyu & Zhong, Zewei & Liu, Suwei & Yang, Zili, 2023. "Effect of market structure on renewable energy Development—A simulation study of a regional electricity market in China," Renewable Energy, Elsevier, vol. 215(C).
    • Handle: RePEc:eee:renene:v:215:y:2023:i:c:s096014812300811x
    DOI: 10.1016/j.renene.2023.118911
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S096014812300811X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.renene.2023.118911?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 search for a different version of it.

    References listed on IDEAS

    as
    1. Christiane Rosen and Reinhard Madlener, 2016. "Regulatory Options for Local Reserve Energy Markets: Implications for Prosumers, Utilities, and other Stakeholders," The Energy Journal, International Association for Energy Economics, vol. 0(Bollino-M).
    2. O'Shaughnessy, Eric, 2019. "Non-monotonic effects of market concentration on prices for residential solar photovoltaics in the United States," Energy Economics, Elsevier, vol. 78(C), pages 182-191.
    3. James B. Bushnell & Erin T. Mansur & Celeste Saravia, 2008. "Vertical Arrangements, Market Structure, and Competition: An Analysis of Restructured US Electricity Markets," American Economic Review, American Economic Association, vol. 98(1), pages 237-266, March.
    4. Hiroux, C. & Saguan, M., 2010. "Large-scale wind power in European electricity markets: Time for revisiting support schemes and market designs?," Energy Policy, Elsevier, vol. 38(7), pages 3135-3145, July.
    5. Zhao, Xiaoli & Zhang, Sufang & Yang, Rui & Wang, Mei, 2012. "Constraints on the effective utilization of wind power in China: An illustration from the northeast China grid," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(7), pages 4508-4514.
    6. Xinyu Chen & Hongcai Zhang & Zhiwei Xu & Chris P. Nielsen & Michael B. McElroy & Jiajun Lv, 2018. "Impacts of fleet types and charging modes for electric vehicles on emissions under different penetrations of wind power," Nature Energy, Nature, vol. 3(5), pages 413-421, May.
    7. Cepeda, Mauricio & Finon, Dominique, 2013. "How to correct for long-term externalities of large-scale wind power development by a capacity mechanism?," Energy Policy, Elsevier, vol. 61(C), pages 671-685.
    8. Simona Bigerna, Carlo Andrea Bollino and Paolo Polinori, 2016. "Renewable Energy and Market Power in the Italian Electricity Market," The Energy Journal, International Association for Energy Economics, vol. 0(Bollino-M).
    9. Xi Lu & Michael B. McElroy & Wei Peng & Shiyang Liu & Chris P. Nielsen & Haikun Wang, 2016. "Challenges faced by China compared with the US in developing wind power," Nature Energy, Nature, vol. 1(6), pages 1-6, June.
    10. Zhao, Xiaoli & Chen, Haoran & Liu, Suwei & Ye, Xiaomei, 2020. "Economic & environmental effects of priority dispatch of renewable energy considering fluctuating power output of coal-fired units," Renewable Energy, Elsevier, vol. 157(C), pages 695-707.
    11. David Cyranoski, 2009. "Renewable energy: Beijing's windy bet," Nature, Nature, vol. 457(7228), pages 372-374, January.
    12. Darmani, Anna & Arvidsson, Niklas & Hidalgo, Antonio & Albors, Jose., 2014. "What drives the development of renewable energy technologies? Toward a typology for the systemic drivers," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 834-847.
    13. Marshall, Luke & Bruce, Anna & MacGill, Iain, 2021. "Assessing wholesale competition in the Australian National Electricity Market," Energy Policy, Elsevier, vol. 149(C).
    14. Frank A. Wolak & Robert H. Patrick, 2001. "The Impact of Market Rules and Market Structure on the Price Determination Process in the England and Wales Electricity Market," NBER Working Papers 8248, National Bureau of Economic Research, Inc.
    15. Bhagwat, Pradyumna C. & Iychettira, Kaveri K. & Richstein, Jörn C. & Chappin, Emile J.L. & Vries, Laurens J. De, 2017. "The effectiveness of capacity markets in the presence of a high portfolio share of renewable energy sources," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 48, pages 76-91.
    16. Dong, Changgui & Qi, Ye & Dong, Wenjuan & Lu, Xi & Liu, Tianle & Qian, Shuai, 2018. "Decomposing driving factors for wind curtailment under economic new normal in China," Applied Energy, Elsevier, vol. 217(C), pages 178-188.
    17. Severin Borenstein & James B. Bushnell & Frank A. Wolak, 2002. "Measuring Market Inefficiencies in California's Restructured Wholesale Electricity Market," American Economic Review, American Economic Association, vol. 92(5), pages 1376-1405, December.
    18. Zhao, Xiaoli & Wu, Longli & Zhang, Sufang, 2013. "Joint environmental and economic power dispatch considering wind power integration: Empirical analysis from Liaoning Province of China," Renewable Energy, Elsevier, vol. 52(C), pages 260-265.
    19. Frank A. Wolak, 2003. "Measuring Unilateral Market Power in Wholesale Electricity Markets: The California Market, 1998–2000," American Economic Review, American Economic Association, vol. 93(2), pages 425-430, May.
    20. Zhao, Xiaoli & Wang, Feng & Wang, Mei, 2012. "Large-scale utilization of wind power in China: Obstacles of conflict between market and planning," Energy Policy, Elsevier, vol. 48(C), pages 222-232.
    21. Lise, Wietze & Linderhof, Vincent & Kuik, Onno & Kemfert, Claudia & Ostling, Robert & Heinzow, Thomas, 2006. "A game theoretic model of the Northwestern European electricity market--market power and the environment," Energy Policy, Elsevier, vol. 34(15), pages 2123-2136, October.
    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. George Ekonomou & Angeliki N. Menegaki, 2023. "China in the Renewable Energy Era: What Has Been Done and What Remains to Be Done," Energies, MDPI, vol. 16(18), pages 1-21, September.

    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. Qi, Ye & Dong, Wenjuan & Dong, Changgui & Huang, Caiwei, 2019. "Understanding institutional barriers for wind curtailment in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 105(C), pages 476-486.
    2. Graf, Christoph & Wozabal, David, 2013. "Measuring competitiveness of the EPEX spot market for electricity," Energy Policy, Elsevier, vol. 62(C), pages 948-958.
    3. Erik Lundin, 2021. "Market Power and Joint Ownership: Evidence from Nuclear Plants in Sweden," Journal of Industrial Economics, Wiley Blackwell, vol. 69(3), pages 485-536, September.
    4. Simona Bigerna & Carlo Andrea Bollino & Maria Chiara D’Errico & Paolo Polinori, 2023. "A new design for market power monitoring in the electricity market. A simulation for Italy," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(1), pages 285-317, April.
    5. Crawford, Gregory S. & Crespo, Joseph & Tauchen, Helen, 2007. "Bidding asymmetries in multi-unit auctions: Implications of bid function equilibria in the British spot market for electricity," International Journal of Industrial Organization, Elsevier, vol. 25(6), pages 1233-1268, December.
    6. Dressler, Luisa, 2016. "Support schemes for renewable electricity in the European Union: Producer strategies and competition," Energy Economics, Elsevier, vol. 60(C), pages 186-196.
    7. Ali Hortaçsu & Fernando Luco & Steven L. Puller & Dongni Zhu, 2019. "Does Strategic Ability Affect Efficiency? Evidence from Electricity Markets," American Economic Review, American Economic Association, vol. 109(12), pages 4302-4342, December.
    8. Jun Dong & Dongran Liu & Xihao Dou & Bo Li & Shiyao Lv & Yuzheng Jiang & Tongtao Ma, 2021. "Key Issues and Technical Applications in the Study of Power Markets as the System Adapts to the New Power System in China," Sustainability, MDPI, vol. 13(23), pages 1-29, December.
    9. Fabra, Natalia & Toro, Juan, 2005. "Price wars and collusion in the Spanish electricity market," International Journal of Industrial Organization, Elsevier, vol. 23(3-4), pages 155-181, April.
    10. Tilman Klumpp & Xuejuan Su, 2015. "Strategic Investment under Open Access: Theory and Evidence," Journal of Industrial Economics, Wiley Blackwell, vol. 63(3), pages 495-521, September.
    11. Xuejuan Su, 2015. "Have customers benefited from electricity retail competition?," Journal of Regulatory Economics, Springer, vol. 47(2), pages 146-182, April.
    12. Lundin, Erik & Tangerås, Thomas P., 2020. "Cournot competition in wholesale electricity markets: The Nordic power exchange, Nord Pool," International Journal of Industrial Organization, Elsevier, vol. 68(C).
    13. David P. Brown & Derek E. H. Olmstead, 2017. "Measuring market power and the efficiency of Alberta's restructured electricity market: An energy-only market design," Canadian Journal of Economics, Canadian Economics Association, vol. 50(3), pages 838-870, August.
    14. Dong, Changgui & Qi, Ye & Dong, Wenjuan & Lu, Xi & Liu, Tianle & Qian, Shuai, 2018. "Decomposing driving factors for wind curtailment under economic new normal in China," Applied Energy, Elsevier, vol. 217(C), pages 178-188.
    15. Fridolfsson, Sven-Olof & Tangerås, Thomas P., 2009. "Market power in the Nordic electricity wholesale market: A survey of the empirical evidence," Energy Policy, Elsevier, vol. 37(9), pages 3681-3692, September.
    16. Song, Feng & Bi, De & Wei, Chu, 2019. "Market segmentation and wind curtailment: An empirical analysis," Energy Policy, Elsevier, vol. 132(C), pages 831-838.
    17. Wolf-Peter Schill & Claudia Kemfert, 2011. "Modeling Strategic Electricity Storage: The Case of Pumped Hydro Storage in Germany," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 59-88.
    18. Poletti, Steve, 2009. "Government procurement of peak capacity in the New Zealand electricity market," Energy Policy, Elsevier, vol. 37(9), pages 3409-3417, September.
    19. Maria Chiara D?Errico, 2020. "Competition in the Italian electricity market: The unforeseen social welfare losses of reform," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2020(2), pages 75-91.
    20. Carlos Suarez, 2021. "Mixed Oligopoly and Market Power Mitigation: Evidence from the Colombian Wholesale Electricity Market," IREA Working Papers 202101, University of Barcelona, Research Institute of Applied Economics, revised Jan 2021.

    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:215:y:2023:i:c:s096014812300811x. 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.