Renewable Portfolio Standard Target Research Articles

Modeling multi-market coupling effects considering the consumption above quota trading market in renewable portfolio standards: An agent-based perspective

The current renewable portfolio standards (RPS) mechanism implemented in China requires electricity consumers to comply with quota obligations by consuming renewable electricity, purchasing tradeable green certificates (TGCs), or engaging in consumption above quota (CAQ) transactions. However, most existing studies on RPS policy seldom consider the CAQ market and ignore the dynamic interactions among microlevel obligated entities, which limits the model from considering the heterogeneity among obligated entities and weakens the capture of macrolevel emergence properties. To fill this research gap, a novel agent-based model for China's RPS policy is established, in which the microlevel obligated subjects' complex interactions and decision-making process in coordinating three compliance approaches, i.e., electricity consumption, TGC consumption and CAQ transactions, are depicted, and the dynamic macrolevel emergence in the electricity market, TGC market and CAQ market in terms of multimarket coupling trading, multimarket price-linkage, renewable energy electricity diffusion and RPS target compliance are captured. Notably, a genetic algorithm-based training stage is structured to calibrate and stabilize the heterogeneous behavioral parameters of obligated entities. The results illustrate that 1) the existence of the CAQ market in RPS policy can significantly stimulate obligated entities to consume more renewable energy electricity earlier, promote individual and aggregate profits, and improve the overall compliance rate and RPS implementation effectiveness and 2) a combined penalty–reward mechanism with an effective reward interval is highly important for promoting RE consumption diffusion and the effective operation of the CAQ market.

Cross-provincial collaborative transaction that considers both the green electricity and the green certificate markets under a renewable portfolio standard policy

In the current implementation of the Renewable Portfolio Standard (RPS), various quota entities are facing challenges, including high costs and limited flexibility within a non-collaborative, single green certificate market mechanism. To address these issues, we developed a cross-provincial collaborative transaction model that considers both the green electricity and the green certificate markets. It consists of five sub-models: a green electricity production net revenue maximization sub-model, a green electricity consumption net benefit maximization sub-model, a green electricity and green certificate market categorization sub-model, a cooperative game sub-model for green electricity and green certificate buyers and sellers, and a cooperative benefits allocation sub-model. The roles of each province (i.e., green electricity and certificate buyers and sellers), along with the optimal green electricity generation, green certificate trading volume, and cost of achieving RPS objectives for each province, can be determined by utilizing the first four sub-models. Ultimately, the cooperative benefit allocation sub-model promotes cooperation among the provinces. To validate the model's effectiveness, we chose five representative provincial-level regions of China for empirical analysis. We found that the cooperative mode decreased the cost by 238.554 × 108 CNY (15.9%) compared with each province independently achieving RPS targets in a non-cooperative mode. Moreover, cooperation increased green electricity generation by 447.94 × 108 kWh (13.3%). The cooperative mode will therefore encourage provincial governments to formulate cooperative strategies for achieving RPS objectives, ultimately reducing implementation costs and increasing flexibility and effectiveness.

Economy-equity equilibrium based bi-level provincial renewable portfolio standard target allocation: Perspective from China

Renewable portfolio standards (RPS) are policy tools used in many countries to promote the use of renewable energy. However, balancing the equity and costs of RPS target allocations is very difficult. Therefore, this study proposed a bi-level framework to characterize this dilemma, in which the upper-level government, as the RPS target allocator, focuses on policy equity and maximizing global renewable energy utilization, and the lower-level government, as the policy implementer, considers the costs to achieve the RPS target. Only when the two types of decision-makers fully interact can they establish economical and equitable goals for a successful implementation. The bi-level mathematical model uses responsibility, capacity, and equality principles to measure equity and optimize the RPS target allocations. The proposed approach was applied to a Chinese case, from which it was found that the inclusion of hydropower in the RPS targets made equitable allocations more challenging, and equitable RPS target allocations have higher costs. Besides, central governments can determine equity principle weights to encourage greater renewable energy generation.

Climate change, costs, or jobs: How policymakers frame state clean energy laws

Renewable portfolio standard (RPS) laws are among the most important climate change policies, requiring a minimum percentage of electricity from clean energy sources. From 2015–2022 in the U.S., eleven states enacted 100 % RPS laws and seven others strengthened their targets. This study examines the issue framing behind these recent RPS laws, which reflects and affects the political context surrounding the policies, people's views, and support among stakeholders. Through coding of policy documents, the study evaluates how policymakers have framed the policies, differences in framing between states with 100 % and non-100 % RPS targets, and variation in framing connected with political party and partisan votes. Surprisingly, given recommendations in the literature to downplay climate issues and emphasize economics, lawmakers predominantly framed 100 % clean energy laws based on climate change. Policymakers that adopted non-100 % RPS laws utilized less climate framing and garnered more Republican Party legislator votes. The results indicate a distinction in framing between more modest and ambitious climate policies, raising a question about the applicability of recommendations urging minimization of climate messaging to transformative climate and clean energy policy efforts. Depending on political conditions, climate framing may be effective for ambitious energy approaches.

Low-carbon transition of China's provincial power sector under renewable portfolio standards and carbon cap

Low-carbon transition of the power sector is an important measure to achieve carbon neutrality in China. Renewable portfolio standards (RPS) and carbon cap were implemented to promote energy transition since 2018. It is essential to evaluate influences of different policy mixes on provincial power systems and inter-provincial electricity transmissions for an optimal policy design and implementation under provincial heterogeneity. This study evaluates the effects of RPS targets and carbon cap on low-carbon transition of China's power system. It further analyzes how to achieve low-carbon transition of China's provincial power sectors with these two policies. Different mixes of RPS target and carbon cap were set to assess their impacts on energy structure change, CO2 emissions abatement, and compliance costs. Results show that the RPS policy can significantly promote investments in renewable energy power in China's resource-rich and high-demand provinces. Investment in nuclear power is important in meeting carbon cap constraints. RPS policy and carbon cap have an overlapping effect on low-carbon transition in China's power sector. Moreover, extensive inter-provincial electricity flows could balance the reverse distribution of energy resources and power loads for renewable energy in a cost-effective way.

Assessing the technical and economic potential of wind and solar energy in China—A provincial-scale analysis

An accurate assessment of wind and solar resources is important for China's future transition to clean energy and the achievement of its carbon-neutrality goals. Based on climate data, geographical information, and the latest technical and economic information, this work estimates the total technical and economic potential of wind and solar power in China and their distribution by province. The main conclusions drawn by analyzing the spatial distribution and temporal evolution of the potential of wind and solar energy are as follows. (1) Both wind and solar energy have sufficient technical potential to support China's vision of carbon neutrality by 2060. (2) The potential is unevenly distributed spatially and is more concentrated in western and northern China, away from demand centers, with Xinjiang and Inner Mongolia accounting for >76% of the total technical potential of onshore wind and solar energy. The offshore wind potential is fairly equally distributed in coastal provinces. (3) In the near-to-medium term (5–10 years), fully utilized local wind and solar resources could help to meet the requirements of the non-hydro Renewable Portfolio Standard (RPS), and could significantly ease the urgency of building long-distance cross-province power transmission lines. For provinces with below-average RPS targets, the suggested non-hydro RPS targets could be further enhanced. (4) In the long term, the construction of adequate west-east and south-north transmission lines will remain essential to the construction of a national carbon-neutral power system.

Impacts of RPS and FIT on inter-regional power transmission line layout in China: Considerations of high renewable energy penetration

Given China's severely separated renewable energy (RE) supply area and load area, the power transmission capacity across regions restricts RE penetration and is directly affected by RE-related support policies. Thus, a multi-objective optimization model is developed to explore the impacts of changes in renewable portfolio standard (RPS) and feed-in tariff (FIT) policies on the optimal transmission line layout. The model regards the maximization of RE power grid-on and minimization of the total cost for the optimal line layout, transmission capacity, and technology selection. We found that power transmission in "West-to-East" and "North-to-South" is strengthened, with the capacity expected to expand 2.2 times between 2020 and 2040. 2024–2026 is the period with the most new lines. The new line grows when the RPS target increase. Compared with the business-as-usual scenario, in the two scenarios where RPS increased by 10% and 15%, the newly built lines' number could grow by 35% and 21%, respectively. On the contrary, if the FIT subsidy continues beyond 2020, the demand for new line construction may decrease, reducing 480 TWh (FIT2025) and 330 TWh (FIT2040) of RE power on-grid. Further, the penetration proportion of renewable generation could be 55.8%–61.8% in 2040, achieving high penetration of RE in China.

An inter-provincial cooperation model under Renewable Portfolio Standard policy

The Renewable Portfolio Standard (RPS) has been implemented by a number of the world's most economically developed nations, to address the great challenges faced regarding energy problems and climate change. However, the current non-cooperation model (NCM) of the RPS in China cannot effectively overcome the bottleneck of renewable energy development due to the disparity between renewable energy-rich regions and high energy-consuming regions. To resolve this dilemma, this study proposes an inter-provincial cooperation model (ICM) under the RPS in China. The ICM consists of two parts: (1) an optimization model to obtain the lowest RPS target realization cost and ensure efficiency, and (2) cost allocation models based on the Shapley value, core, and nucleolus methods, to ensure fairness in different situations. The cases of Beijing, Shandong, Shanxi, and Inner Mongolia show that the total cost of the four provincial regions covered by the ICM will be reduced by 57.07 × 108 CNY, or 8.25% compared with the NCM. Sensitivity analysis was conducted to test the impact of different parameter values on the ICM results. Based on these results, we propose policy recommendations to promote implementation of the ICM.

The value allocation model of renewable portfolio standards considering the contribution of renewable energy consumption on the demand side

Under China's current Renewable Portfolio Standards (RPS) policy system, the provincial power grid is the assessment subject, and then the assessment is conducted on the user side. However, in the centralized clearing power market, renewable energy (RE) consumption on the user side cannot be accurately identified, so accurate value transmission cannot be formed to guide users to optimize their electricity consumption behavior. To improve this problem, this paper identifies the irreplaceable role of users in RE consumption through time series simulation. We construct a three-layer RPS assessment value transmission model of “power grid company - retailers - users” based on the identified unique contributions of each user. The equilibrium state of multi-market participants is obtained based on the decentralized training framework of reinforcement learning. The following conclusions are drawn through simulation analysis:(1) the user-side RE contribution identification method can effectively identify the user's contribution to RE consumption, which can reduce about 8% or increase about 7.48% of RPS cost allocation according to different contribution degrees; (2) the RPS value allocation mode can optimize users' power consumption behavior, achieve peak shaving and valley filling, promote RE consumption, and reduce about 0.6% of the abandoned wind power; (3) Under the RPS system, the effect of improving the response-ability of the user-side is better than increasing the RPS target and the peak shaving capacity.

The development of renewable energy industry under renewable portfolio standards: From the perspective of provincial resource differences

A low-carbon energy policy is an effective measure for promoting the development of renewable energy(RE). China has introduced renewable portfolio standards(RPS) and voluntary subscription for tradable green certificates(TGCs), but the market response is not significant. China's electricity trading functions at provincial-level regions, and there are differences in resources between the provinces. New policies need to consider the characteristics of each province to reduce market implementation risk for introduction and implementation. Therefore, based on the provincial characteristics of energy resource endowment in China, we construct a system dynamics(SD) model of the coupling of the RE market, consumption above quota(CAQ), and TGC market based on the structure of the sending-end grid(SG) and receiving-end grid(RG). Three types of TGC models were designed based on the scope of the TGC market. Finally, the impact of policy parameters such as the RPS target, inter-provincial transmission capacity, TGC validity period, and technology cost on the development of RE industries in both SG and RG was analyzed. The results show that the TGC market to be developed independently in various provinces in the initial stage and later expanded into a unified market. Increased RPS requirements, increased inter-provincial transmission capacity, and lower RE costs can enhance policy implementation.

An inter-provincial tradable green certificate futures trading model under renewable portfolio standard policy

The geographically reverse distribution of renewable energy-rich regions and power load centers poses great challenges to the realization of Chinese renewable portfolio standard (RPS) targets, which has attracted academic attention. However, research on the inter-provincial management mechanisms of RPS is rare. To fill this gap, this study develops an inter-provincial tradable green certificate (TGC) futures trading model that combines TGC futures with inter-provincial TGC trading, which provides an efficient and cost-effective mechanism to achieve the RPS targets. In the model, we first construct an RPS target realization cost function, then divide provinces into buyers and sellers of TGC futures, then optimize the buyers' or sellers’ renewable energy generation under the cooperation mode, and finally use the Shapley value method to distribute the cooperation benefits. An empirical study on five Chinese provinces showed that the inter-provincial TGC futures trading model can significantly reduce the RPS target realization cost by 3.291 billion CNY or by 4.52% and increase renewable energy generation by 414.29 × 108 kWh. Our sensitivity analysis of the TGC futures prices verifies the robustness of the model. Finally, our study proposes policy suggestions for the effective design of the TGC futures market and successful implementation of the RPS policy.

Optimizing the provincial target allocation scheme of renewable portfolio standards in China

Renewable portfolio standards (RPS) is widely regarded as a useful policy tool to steer energy transition. China government has recently released an RPS target allocation scheme to help promote its renewable electricity consumption. Formulating an efficient and equitable RPS target allocation scheme is a vital step to ensure the effectiveness of RPS. In this paper we argue that data envelopment analysis (DEA) can be used to optimize the provincial RPS targets in China from an efficiency perspective. We first evaluate the efficiency of the officially released RPS target allocation scheme and then apply a zero-sum gains DEA model to optimize the scheme. Further, we use the Gini coefficient to verify the merits of the optimized scheme over the official scheme in equity. The results indicate that the renewable electricity consumption responsibility allocated among provinces in the official scheme may suffer efficiency loss. Central, southern, eastern, and southwestern China can obtain more renewable electricity consumption responsibility, while northeastern, northern, and northwestern China should undertake less consumption responsibility. It provides the adjustment direction for RPS targets allocation among provinces which helps optimize the electricity consumption structure.

Assessing the regional adaptive capacity to renewable portfolio standard policy in China

The implementation of renewable portfolio standard (RPS) policy may bring some adverse effects when the region lacks of the capacity to cope with policy stresses. This paper proposes an analytical framework of adaptive capacity index to RPS policy (ACI-RPS) and apply it to evaluate the provincial adaptive capacity to RPS in China over time. The results show that the ACI-RPS in China displayed an increasing trend but declined slightly in 2017 due to the technical bottlenecks. There was a wide disparity in ACI-RPS across the provinces in China, with eastern provinces having the highest but northeastern provinces having the lowest scores. These results indicate that provincial RPS targets need to be set with reference to their adaptive capacity and local energy status. Specifically, more ambitious targets may be assigned to eastern, southern, and northern provinces. It is concluded that the promotion of power grid construction and the acceleration of power marketization are two effective ways to further improve the capacity to cope with RPS policy of a region.

The Impact of Renewable Portfolio Standards Targets on Power Investment, Production, and Transmission in China's Provinces

The Impact of Renewable Portfolio Standards Targets on Power Investment, Production, and Transmission in China's Provinces

Role of policy in the development of business models for battery storage deployment: Hawaii case study

Hawaii's 100% Renewable Portfolio Standard target has led to rapid growth in renewable generation resources. This has resulted in grid issues given the islanded nature of Hawaii's grid. The state has decided to use battery storage in its grid to address these issues. This motivates us to try to understand the various business models in the state and the minimum set of barriers that must be overcome for its successful deployment. We achieve the former by assessing the projects in the state and identifying the dominant business models. For the latter, we use a barrier-solution framework that posits the minimum set of barriers that must be met for the successful deployment of battery storage business models and we verify it by identifying the role of various policies/drivers in supporting these business models. As a result, we find predominantly three business models in Hawaii: Co-located Front-of-the-Meter, Behind-the-Meter, and Aggregated Behind-the-meter. We also verify that at least one barrier from barrier categories associated with market demand and project economics along with all the barriers related to interconnection and market participation must be addressed for successful deployment of battery storage. Based on these findings, we give recommendations to policymakers seeking to develop a battery storage market.

Provincial allocation of renewable portfolio standard in China based on efficiency and fairness principles

An efficient and equitable allocation scheme for renewable portfolio standard (RPS) quota is of great significance to renewable energy (RE) development and the improvement of the electricity trade market. This study establishes a quota allocation model based on the lowest cost of RE generation to determine the RPS targets (LC-RPS) of 30 Chinese provinces. Subsequently, an index system based on energy consumption, RE resource endowment, historical responsibility, and transmission facilities is constructed to determine the RPS targets (IN-RPS). Finally, the two scenarios mentioned above are compared with the RPS target allocation scenario published by the Chinese government (GM-RPS) and with the NO-RPS scenario. The results show that: Compared with those of GM-RPS and IN-RPS, the power generation cost associated with the LC-RPS is reduced by 8.5% and 49.4%, respectively, and the unit power generation cost is reduced by 9.4 and 39.7 RMB/MWh, respectively; the fairness of the LC-RPS is marginally worse than that of the other three scenarios, but the fairness of the power generation cost is still relative average, thereby demonstrating distribution fairness. This paper appeals to the Chinese government for the perfection of a national renewable energy certificates (REC) trade market and offering additional REC for solar generation.

Provincial renewable energy dispatch optimization in line with Renewable Portfolio Standard policy in China

China has proposed the Renewable Portfolio Standard (RPS) policy to advance the stable development of renewable energy. The RPS requires each province to achieve a stated minimum share of renewable energy power in the total provincial power generation. However, there is an obvious mismatch between the actual capability of generating renewable power and the assigned responsibility for the share of renewable energy power based on the RPS in some provinces. Therefore, this study aims to optimize the renewable power dispatching strategy across provinces for satisfying the RPS requirements in China and to assess the corresponding pressure for each province. A renewable energy power dispatching model is developed, and an economically feasible strategy for dispatching renewable energy power in Chinese provinces in 2020–2022 was obtained. The results indicate that it is necessary to dispatch 395.2 and 140.4 TWh of hydropower and non-hydropower nationwide, respectively, in 2022 to fulfill the RPS target when the COVID-19 is effectively controlled worldwide. If COVID-19 cannot be effectively controlled, 376.6 and 127.8 TWh of hydropower and non-hydropower must be dispatched nationwide to fill the gap. Beijing, Tianjin, Shanghai, and Zhejiang are faced with a relatively high pressure under the RPS target. Finally, a path for each province to achieve its RPS target is proposed.

Do renewable portfolio standards increase renewable energy capacity? Evidence from the United States

This research evaluates the impacts of the Renewable Portfolio Standard (RPS) on renewable electricity capacity using annual data spanning 47 states between 1990 and 2014 in the United States. RPS is a state-level policy that requires electricity suppliers to include a certain fraction of renewable electricity in their total electricity sales over a specified time period. Following nuanced identification strategies, generalized difference-in-difference method is used to transform observational data into a quasiexperimental setting to mitigate against potentially inconsistent estimator or selection bias concerns vis-à-vis the adoption of RPS across states. Generalized least squares with panel corrected standard errors and spatial econometric methods are selected as estimation techniques. The results show that RPS adoption drives more than one third increase in overall renewable electricity capacity. RPS impacts on total electricity capacity remain significantly positive with consistent estimates across modeling scenarios. However, the results reveal that impacts of heterogeneous RPS attributes differ across competing sources of renewable electricity. The impacts are positively significant for solar and wind capacity with the largest impact on wind capacity, while they are insignificant or significantly negative for biomass and geothermal capacity. The significantly positive contribution of renewable energy certificates provision and manifestation of spatial spillover effects indicate the regional marketing possibilities of renewable energy. The results imply that scaling up RPS proliferation across the states and specifying RPS targets by renewable energy sources at least up to the point when renewable energy sector achieves efficiency gains (economies of scales and allocative efficiency) or better alternatives to the RPS become available (e.g., least-cost carbon pricing policy), can play critical roles to exert transformative advances in renewable electricity sector.

Renewable Portfolio Standards: Do Voluntary Goals vs. Mandatory Standards Make a Difference?

AbstractThis research investigates whether an obligation to meet a Renewable Portfolio Standard (RPS) target in U.S. states affects the policy effectiveness, which is defined as the RPS‐related renewable electricity capacity additions. A voluntary RPS target can serve as a political device for signaling commitment to certain goals, though there is no penalty if the goal is not met. Alternatively, mandatory RPS targets have varying stringency and uneven enforcement. Our results indicate that the compulsoriness of a state RPS is an insignificant determinant of RPS‐related renewable electricity capacity additions. Factors other than whether an RPS target or goal is compulsory are more important in influencing renewable electricity development, including policy stringency. If a state seeks a modest level of renewable electricity development, setting a voluntary goal can sometimes be effective and more efficient. Nonetheless, a mandatory RPS may be required to accomplish a more significant level of renewable electricity deployment.

Coordination of tradable carbon emission permits market and renewable electricity certificates market in China

Abstract In order to assist the low-carbon transformation of power sector, China is planning to establish the national Tradable carbon emission permits (TEPs) market and Renewable Electricity Certificates (RECs) market under mandatory carbon caps and Renewable Portfolio Standards (RPS) targets simultaneously. How to coordinate the two markets and what the coordination effects are become key issues. In the present study, a multi-region multi-market equilibrium model considering both mechanisms was developed and applied to China as the case study. The model established the effective coordination interval between RPS targets and carbon caps in which the two markets can operate jointly. Then the coordinated markets were proved to be more economically efficient so long as the government pursues the dual goal of reducing carbon emission and promoting renewable energy in sync. Finally, the theoretical and practical advantages of market coordination compared with uncoupled operation of these markets, such as diversifying markets risk, keeping TEP/REC price at lower level, and reducing consumers' electricity purchase cost, were discussed.