Abstract
SummaryThe energy-only-market implemented in China cannot strongly support large-scale renewable energy expansion because the renewable energy expansion may disorderly phase out non-renewable power capacity. However, non-renewable power capacity, particularly the coal-fired power capacity in China, can provide vital power system adequacy needed by renewable energy expansion. We introduce capacity payments to orderly retire current coal-fired power capacity by transforming some of it into reserve capacity in order to support renewable energy expansion. Using generation and transmission expansion results from the SWITCH-China model, this paper proposes an orderly retirement path based on the assumption of implementing capacity payments. Our results show that roughly 100–200 gigawatts (GW) of coal-fired power capacity can continue to serve through 2050, and most of it is used as reserve capacity. Capacity payments of 400–700 billion yuan are needed to achieve this retirement path, and a higher adequacy requirement needs higher payments.
Highlights
The power sector is the CO2 emissions sector in China (Li et al, 2017)
SUMMARY The energy-only-market implemented in China cannot strongly support largescale renewable energy expansion because the renewable energy expansion may disorderly phase out non-renewable power capacity
Using generation and transmission expansion results from the SWITCH-China model, this paper proposes an orderly retirement path based on the assumption of implementing capacity payments
Summary
The power sector is the CO2 emissions sector in China (Li et al, 2017). In terms of technical feasibility, cost efficiency and resource availability, the large-scale expansion of renewable energy will be key means of decarbonizing the power sector for a long time in the future (Cheng et al, 2019; Zhou et al, 2018). Power sector decarbonization is a multi-objective decision-making task for China. It is necessary to realize the orderly retirement of coal-fired power plants. If the existing coal-fired power plants are forced to retire in a disorderly manner, it may lead to a huge amount of stranded assets, and may further bring unemployment issues (Burke et al, 2019; Louie and Pearce, 2016)
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