Abstract
China’s support policy for renewable electricity belongs to a feed-in tariffs scheme. With the rapid development of renewable electricity industries, this set of policies brought about a heavy fiscal burden for the government. The exploration of whether current support policy provided excessive subsidies for renewable electricity is of great practical significance. We hold an idea that the internalization of positive externality is the only criterion for the government to support the development of a renewable electricity industry. The problem of whether the current policy provides excessive subsidies for renewable electricity industry can be solved by assessing whether its positive externality is internalized, as renewable electricity industry has a characteristic of externality. Our study object is an assumed biomass power plant in Jingning County, Gansu Province. A system dynamics model was built. Applying the environmental cost accounting method and net present value analysis method, we connected the techno-economic analysis of the biomass power plant with the measurement of positive externality of biomass power generation together. In this system dynamics model, we developed an indicator to reveal whether the subsidies provided by governmental policies can compensate the positive externality generated by the assumed biomass power plant. This study mainly draws the following conclusions: Firstly, China’s current support policy does provide excessive subsidies for the renewable power industry. The subsidies received by biomass power plants from the government are higher than the positive externality generated by them; secondly, the positive externality measurement of the biomass power industry is influenced by many regional factors; thirdly, without governmental policy support, biomass power plants cannot compete with traditional power companies; fourthly, as biomass power generation is concerned, the current price subsidy intensity is about US$0.0132 higher per kWh than a reasonable level. Furthermore, the parameters frequently applied in the calculation of the prices of pollutant emission reduction in Chinese research papers are relatively small, which is only half of their actual values. Jingning County, situated in inland west-northern China, lacks typicality. There is a limitation in judging whether the government’s support policy for renewable electricity is reasonable through a feasibility analysis of investment in a biomass power generation project. This may be the main drawback of this study.
Highlights
This study explores the feasibility of generating power using apple tree branches as fuel inputs to replace biogas in the primary apple production areas using a case study in Jingning County, Gansu Province
T=2019 where Q is the indicator of externality internalization, Eet is the positive environmental externalities of biomass power generation in t year, Est is the social benefits in t year, and FSt is the government’s fiscal subsidy in t year
Based on our research and analysis, we conclude the following: (1) According to the established system dynamics model, the positive externalities of biomass power generation are influenced by many factors, such as the biomass market price, market price of pollutant emission reduction, labor wage, and so on
Summary
In order to expand the market share of renewable electricity, many countries in the world have implemented policies to encourage the development of renewable energy industries [1,2]. Price-based feed-in tariff (FIT) and market-based renewable portfolio standards (RPSs) schemes are the two most frequently-used support schemes [3,4]. Countries which have implemented FIT schemes include Germany, Denmark, and Spain; they set fixed prices or a price premium over the market price of electricity for a specified time period [5]. The RPS scheme is represented by the UK, the US, and Australia, which require electricity producers to acquire a certain percentage of renewable electricity. Tradable green certificates (TGCs) are issued for all renewable electricity produced
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