Market reform of Yunnan electricity in southwestern China: Practice, challenges and implications

Abstract

This paper reviews the electricity market reforms improving resource allocation and renewable energy integration in Yunnan. Given the predominance of hydropower and the importance of energy exports in Yunnan, the province presents a challenging case study of electricity market reforms. The experience of and lessons from Yunnan provide a reference for other provinces in China engaged in the growing adoption of renewable energy. The main contributions of this paper lie in the extension of the existing understanding of electricity reforms in Yunnan and China. Based on extensive data previously unreported in the literature, this paper shows how the Yunnan electricity market functions in practice and indicates where the practice is deficient in terms of the theory of how electricity markets should function. Finally, this paper suggests how market reforms should be adopted toward a scientifically designed electricity market.