Pricing Mechanism for Natural Gas Distributed Generation Based on Classified Benchmark Price

Abstract

Natural gas distributed generation (NGDG) has been widely concerned, promoted, and applied all over the world because it has advantages such as high comprehensive energy efficiency, environmental protection, sustainable and stable power supply, and so on. It also has become an important part of the energy strategy in China. Unfortunately, most NGDG projects on production in China do not operate very well due to several reasons such as high investment and operation cost, long load cultivation period, and so on. Thus it is quite urgent to design one pricing mechanism suitable for NGDG to meet the need in the transition stage before fully power marketization and rationalize and standardize the feed-in tariff of NGDG. This paper proposes a one-part tariff mechanism for NGDG based on classified benchmark price, which solves the problem that most NGDG projects have to refer to the benchmark tariff of local coal power plants due to the absence of NGDG pricing benchmark. Meanwhile, according to the characteristics of energy projects and regions, the mechanism establishes a two-dimensional classification scheme for NGDG, sets up the benchmark data and the method to determine the values, and then put forward the benchmark tariff of NGDG. It also changes the “one plant one price” approach in some areas. Finally, using the tariff mechanism and operating period price model, we calculate the benchmark tariff of all kinds of NGDG in several typical regions. The results can be referenced for research and NGDG tariff mechanism establishment in various countries.