The Impact of Renewable Portfolio Standards Targets on Power Investment, Production, and Transmission in China's Provinces

Abstract

China has implemented a renewable portfolio standards (RPS) policy to promote renewable energy development by stipulating a minimum proportion of renewable energy electricity in the electricity consumption mix. The evaluation of influences of the RPS policy on the provincial power system and on inter-provincial electricity transmission is necessary and meaningful for an optimal policy design and implementation. This study aimed to answer three questions: (1) How could provinces meet the RPS targets? (2) What are the broader effects of the implementation of the RPS targets on the power system? and (3) Is there an optimal RPS allocation scheme? The impact of the national and provincial RPS target allocation schemes, published by the China National Energy Administration, was compared with the impacts of the cost-optimal RPS target allocation scheme considering energy structure change, CO2 emissions abatement, and compliance costs. Results show that the RPS policy can significantly promote the investments in renewable energy power in China’s western provinces, characterized by rich renewable energy resources endowment, and in more developed provinces with high electricity demand. Moreover, this policy is expected to increase inter-provincial electricity flows, due to the reverse distribution of power supply and power loads for renewable energy. With the RPS policy, massive electricity transmission can help decrease the power system costs.

Keywords: Renewable portfolio standards, China's power system, Renewable energy development, Energy Transition