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Research on a Microgrid Subsidy Strategy Based on Operational Efficiency of the Industry Chain

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  • Yong Long

    (School of Economics and Business Administration, Chongqing University, Chongqing 400030, China)

  • Chengrong Pan

    (School of Economics and Business Administration, Chongqing University, Chongqing 400030, China
    International Business School, Sichuan International Studies University, Chongqing 400031, China)

  • Yu Wang

    (School of Economics and Business Administration, Chongqing University, Chongqing 400030, China)

Abstract

Government subsidy is a powerful tool to motivate the development of a new energy industry. At the early stage of microgrid development, for the sake of the cost and benefit issue, it is necessary for the government to subsidize so as to support and promote the development of microgrids. However, a big challenge in practice is how to optimize the operational efficiency of the microgrid industry chain with varying targets and methods of subsidy. In order to explore this problem, we construct a subsidy model based on the microgrid industry chain, involving government, investor, operator, equipment supplier, and user. Through calculation and solution of this model, we obtain price and return indicators of each microgrid industry chain participant when the subsidy target differs. Based on that, we contrast and compare the optimal subsidy strategy and influencing factors when operational efficiency indicators vary. Finally, we validate and analyze this model with numerical analysis and discuss the impact of development stage, technological level, and change in subsidy amount on the operational efficiency of the microgrid industry chain and on the returns of each participant. This result is of great significance to subsidy practice for microgrids and the development of microgrids.

Suggested Citation

  • Yong Long & Chengrong Pan & Yu Wang, 2018. "Research on a Microgrid Subsidy Strategy Based on Operational Efficiency of the Industry Chain," Sustainability, MDPI, vol. 10(5), pages 1-26, May.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:5:p:1519-:d:145677
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    References listed on IDEAS

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    Cited by:

    1. Deng Xu & Yong Long, 2019. "The Impact of Government Subsidy on Renewable Microgrid Investment Considering Double Externalities," Sustainability, MDPI, vol. 11(11), pages 1-15, June.
    2. Pablo Benalcazar & Adam Suski & Jacek Kamiński, 2020. "The Effects of Capital and Energy Subsidies on the Optimal Design of Microgrid Systems," Energies, MDPI, vol. 13(4), pages 1-23, February.
    3. Min Song & Yu Wang & Yong Long, 2022. "Investment and Production Strategies of Renewable Energy Power under the Quota and Green Power Certificate System," Energies, MDPI, vol. 15(11), pages 1-24, June.

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