Benefit evaluation and mechanism design of pumped storage plants under the background of power market reform - A case study of China

Abstract

Pumped storage plant can help promote the low-carbon transformation of China's power system because of its fast response and energy time shift. Based on the pumped storage electricity price mechanism and conforming to the construction law of China's spot power market, this paper established a life cycle benefit evaluation model of pumped storage plant through different market stages, and the evaluation results can provide decision-making reference for investors and national policy makers. Through the life cycle simulation of the pumped storage plant, it is found that the capacity price approved by the government has a downward trend and tends to be stable, and the capacity electricity revenue shows a “U" change trend. The results show that the electricity price connection mechanism designed in this paper can make the pumped storage plant recover costs and obtain reasonable income in the electricity market. When the market mechanism is not perfect, gradually reducing the proportion of the approved capacity price covering the capacity of pumped storage plants will improve the economic benefits of pumped storage plant and help the pumped storage plant to smoothly convert to the status of an independent market subject.