Pricing the deep peak regulation service of coal-fired power plants to promote renewable energy integration

Abstract

At present, the decarbonization of China’s power system depends on the large-scale integration of renewable energy. Motivating coal-fired power plants to provide deep peak regulation (DPR) service is the most important means of avoiding renewable energy curtailment. This research proposes a pricing mechanism for DPR and proves that this mechanism meets the requirements of incentive compatibility and individual rationality. By determining the unit price of DPR service according to the value created for the power system by the service provider, this mechanism can effectively promote renewable energy integration at minimum cost. A unit commitment case based on the actual generation structure and load curves of a southern province in China is constructed to quantitatively study the mechanism. Our results show that the unit price of DPR service will rise as the renewable energy installed capacity increases and will drop as carbon or coal price increases. The unit price varies between 50 and 500 yuan / MWh and exceed the generation income, which indicates that the mechanism can encourage coal-fired power plants to promote integration of renewable energy.