Optimal production decision of hybrid power generation enterprises in multi-quota policy coupled markets

Lan Jiang and Ming Meng

Energy Economics, 2024, vol. 134, issue C

Abstract: At present, China is adopting both Carbon Emission Trading (CET) and Tradable Green Certificate (TGC) markets to optimize the resource allocation of its power industry. To mitigate the impacts of the above dual markets, more and more power generation enterprises are adopting hybrid production mode, generating electricity from thermal and new energy units simultaneously. In these complex production and market conditions, enterprises are difficult to arrange their generation activities. This research describes the production decision process of hybrid power generation enterprises with different market positions, obtains their optimal yield, and then offers market equilibrium results. In addition, the consequences of enterprise collusion behaviors and government interventions are also measured. Numerical experiment results confirm the correctness of the production decision model and reveal the following facts: 1) CET and TGC markets effectively control the carbon emission level and promote the consumption of new energy, but magnify the failure of electricity market to a certain extent. 2) CET and TGC markets promote each other in function. The existence of one market can help the other to achieve the anticipated goal. 3) Enterprises first offset the impact of market condition changes by adjusting the share of new energy generation, and then digest the residual influence by adjusting the total power generation. 4) Enterprise collusion behaviors aggravate the welfare loss of electricity consumer and then lower the expected effects of CET and TGC markets.

Keywords: Hybrid power generation enterprise; Production decision; Market equilibrium; Tradable green certificate market; Carbon emission trading market (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:134:y:2024:i:c:s0140988324003323

DOI: 10.1016/j.eneco.2024.107624

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