Economy-equity equilibrium based bi-level provincial renewable portfolio standard target allocation: Perspective from China

Abstract

Renewable portfolio standards (RPS) are policy tools used in many countries to promote the use of renewable energy. However, balancing the equity and costs of RPS target allocations is very difficult. Therefore, this study proposed a bi-level framework to characterize this dilemma, in which the upper-level government, as the RPS target allocator, focuses on policy equity and maximizing global renewable energy utilization, and the lower-level government, as the policy implementer, considers the costs to achieve the RPS target. Only when the two types of decision-makers fully interact can they establish economical and equitable goals for a successful implementation. The bi-level mathematical model uses responsibility, capacity, and equality principles to measure equity and optimize the RPS target allocations. The proposed approach was applied to a Chinese case, from which it was found that the inclusion of hydropower in the RPS targets made equitable allocations more challenging, and equitable RPS target allocations have higher costs. Besides, central governments can determine equity principle weights to encourage greater renewable energy generation.