The economics of peaking power resources in China: Screening curve analysis and policy implications

Abstract

Concomitant with the changes in power generation mix and power load profile, the power load characteristics have continued to deteriorate, and structural conflicts have occurred between power i.e., ample power generation capacity coupled with short in peaking resources. At the same time, the peak load gap appears. Under these, traditional practice of building more new coal capacity to meet with the short gaps in peak load is not only no longer economically feasible but also unsustainable given the global climate change requirements. This paper uses the screening curve model to plan peak load resources. Five schemes are considered in this paper: new coal units, new gas units, life extended coal units; demand response (DR) and electrochemical energy storage. Varying scenarios considering the cost dynamics of retrofitting existing coal power plants, demand response and energy storage are examined. The results show that: in the case where the duration of peak power gap is 50-100 hours, the most economical choice is demand response or energy storage; regardless of the cost dynamics of energy storage and demand response, when the duration of peak power gap grows longer, extending the service life of old coal power will become the economic optimal choice. In the future, energy policies in China could be concentrated on promoting demand response, exploring the business model for energy storage, strictly controlling the coal power and exploiting the value of existing coal power.