Cost–Benefit Analysis of Cross-Regional Transmission of Renewable Electricity: A Chinese Case Study

Zanxin Wang (), Yaqing Liu, Rui Wang and Yushang Hu
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Zanxin Wang: School of Business and Tourism Management, Yunnan University, Kunming 650091, China
Yaqing Liu: School of Economics, Yunnan University, Kunming 650091, China
Rui Wang: School of Economics, Yunnan University, Kunming 650091, China
Yushang Hu: School of Business and Tourism Management, Yunnan University, Kunming 650091, China

Sustainability, 2024, vol. 16, issue 23, 1-21

Abstract: While the establishment of a unified regional power market that promotes the optimal use of renewable energy is considered to be a pathway to meeting the policy targets of “carbon peaking” and “carbon neutrality”, the economic feasibility of the power transmission project is not well understood. To fill this gap, this study conducted a cost–benefit analysis of a proposed project that transmits hydropower, photovoltaic power, and/or wind power whose ratios are 100:0:0, 79:13:8, and 65:22:13 in three scenarios from Dian to Yu in China. It was found that the project has economic feasibilities for each scenario; however, this highly depends on its external benefits, discount rates, and transmission quantity. As the ratio of hydropower becomes lower, the net present value decreases from 117.32 billion to 112.99 billion for an annual transmission of 7.498 billion kWh of electricity. Since the substitution of coal-fired power with renewable power contributes the highest benefit to the project, the cross-regional transmission of renewable electricity should be promoted jointly with the internalization mechanism of externalities.

Keywords: unified power system; power transmission project; economic feasibility; internalization of externality (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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