Does the change in incentive policies promote renewable energy power generation in China?

ABSTRACT

To reduce the financial burden brought by the feed-in tariff (FIT) policy, China is shifting its renewable energy support policy to the renewable portfolio standard with tradable green certificates (RPS/TGC). Moreover, the two policies are being implemented in parallel in the transitional period. In this context, this study investigates the game between renewable energy power plants (REPPs) regarding electricity outputs and tradable green certificate (TGC) prices under different renewable energy support policies practiced in China. We focus on analyzing the impact of policy changes on the competing REPPs’ decisions and the renewable electricity market with TGCs. The results show that implementing the RPS/TGC policy inhibits the development of renewable electricity unless the subscription of TGCs is promoted. Government subsidy arrears significantly affect electricity outputs and TGC subscriptions. The low subscription rate of TGCs is caused not by the subsidy-based TGC pricing mechanism but by government subsidies. This suggests that the government should implement the RPS/TGC policy, and demand-side power consumption responsibility weights should also be strengthened to promote TGC subscriptions.

KEYWORDS:

• Renewable electricity
• government subsidy
• feed-in tariff
• renewable portfolio standard
• tradable green certificate
• game theory

Acknowledgements

We sincerely thank the Editor and three anonymous referees for their constructive comments that have greatly helped us to improve the paper.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ https://www.world-nuclear.org/information-library/energy-and-the-environment/carbon-dioxide-emissions-from-electricity.aspx

² https://energyiceberg.com/china-renewable-power-price/

³ https://www.163.com/dy/article/H3K806DO0519D3CQ.html.

⁴ http://www.npc.gov.cn/npc/c30834/201912/2b7568de01944c33b9326c325dcd498f.shtml.

⁵ https://www.ndrc.gov.cn/xxgk/zcfb/tz/201905/t20190515_962446.html.

⁶ https://www.ndrc.gov.cn/xxgk/zcfb/tz/201702/t20170203_962895.html

⁷ http://www.nea.gov.cn/2017–02/06/c_136035626.htm

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⁹ http://www.greenenergy.org.cn/shop/index.html

¹⁰ http://www.greenenergy.org.cn/shop/index.html

¹¹ https://www.ndrc.gov.cn/xxgk/zcfb/tz/201702/t20170203_962895.html

¹² https://guangfu.bjx.com.cn/news/20200102/1033072.shtml.

Additional information

Funding

This work was partially supported by the National Key R&D Program of China [grant number 2018YFB1601401] and the National Natural Science Foundation of China [grant number 71103149].