Orderly retire China's coal-fired power capacity via capacity payments to support renewable energy expansion
Guangzhi Yin,
Bo Li,
Natalie Fedorova,
Patricia Hidalgo-Gonzalez,
Daniel M. Kammen,
Maosheng Duan
Affiliations
Guangzhi Yin
Institute of Energy, Environment and Economy, Tsinghua University, Beijing 100084, China; Renewable and Appropriate Energy Laboratory, Energy and Resources Group, University of California, Berkeley, CA 74720, USA
Bo Li
State Key Laboratory of Power Transmission Equipment & System Security and New Technology, School of Electrical Engineering, Chongqing University, Chongqing 400044, China; Renewable and Appropriate Energy Laboratory, Energy and Resources Group, University of California, Berkeley, CA 74720, USA
Natalie Fedorova
Renewable and Appropriate Energy Laboratory, Energy and Resources Group, University of California, Berkeley, CA 74720, USA
Patricia Hidalgo-Gonzalez
Department of Mechanical and Aerospace Engineering, University of California, San Diego, La Jolla, CA 92093-0411, USA; Renewable and Appropriate Energy Laboratory, Energy and Resources Group, University of California, Berkeley, CA 74720, USA
Daniel M. Kammen
Renewable and Appropriate Energy Laboratory, Energy and Resources Group, University of California, Berkeley, CA 74720, USA; Goldman School of Public Policy, University of California, Berkeley, CA 74720, USA; Corresponding author
Maosheng Duan
Institute of Energy, Environment and Economy, Tsinghua University, Beijing 100084, China; Corresponding author
Summary: The 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.
