Economic viability and regulation effects of infrastructure investments for inter-regional electricity transmission and trade in China

Abstract

The transition of energy structure to renewable energy is a social and systematic engineering that requires complex regional power interconnection as a support. Thus, an assessment of the economic viability of infrastructure investments for supporting such transmission expansion is crucial. This study presents a multi-regional power system optimization model to evaluate the potential economic benefits of infrastructure investments for the national inter-regional electricity network in China under various scenarios in the context of low-carbon transformation. Key factors influencing economic benefits are analyzed specifically and regulation barriers associated with inter-regional electricity trade are given particular attention. The results show that approximately 140 Giga Watt (GW) of infrastructure construction for the inter-regional electricity trade network is economically viable during the planning horizon. These new interconnections would lead to 250–440 billion RMB of economic benefits. Regional electricity trade barriers caused by imperfect market mechanisms have a negative impact on the economic benefits of transmission infrastructure investments, although they promote scale and utilization efficiency in the power sector of electricity-importing regions. Improving the national grid coordination mechanism to break the grid isolation between the State Grid Corporation of China and the China Southern Power Grid is crucial, because a large number of transmission lines connecting these two national-level power grids are economically viable.