Does coordination with renewable energy through virtual power plants enhance the transition willingness of coal-fired power plants? An evidence from city in China

Xiaoyan Lv, Xingmei Li, Qinliang Tan and Dongqing Jia

Energy Economics, 2025, vol. 148, issue C

Abstract: Transitioning coal-fired power plant through retrofit not only promotes renewable energy accommodation but also improves energy system sustainability. However, the lack of renewable energy operational characteristic and energy price information causes retrofit decision to misalign with renewable energy accommodation, hindering coal-fired power plant transition willingness and, in turn, poor retrofit decision negatively impact renewable energy operation and energy efficiency. Given this coupling relationship, leveraging virtual power plant as an intermediary platform to facilitate their coordination presents a compelling solution, which has been largely overlooked in existing literature. Building on this, this paper proposes a bi-level optimization model that, for the first time, considers the coupling between coal-fired power plant retrofit and systemic synchronized operation. Furthermore, to address the uncertainties associated with renewable energy in the model, a distributionally robust optimization approach based on the Wasserstein distance is employed, with auxiliary variable introduced to handle the resulting nonlinearity. Simulation results show that: (1) the method proposed in this paper increases system revenue by 3.29 times and the revenue earned by the coal-fired plant by 2.47 times, and (2) reduces carbon emissions by approximately 29.95 %, both compared to the Case without considering this coupling, which significantly enhances the willingness of coal-fired power plant transition; (3) considering the uncertainty in renewable energy output leads to a 12.06 % reduction in system revenue, with coal-fired power plant revenue decreasing by 5.96 %.

Keywords: Coal-fired power plant transition; Virtual power plant; Renewable energy; Bi-level optimization (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:148:y:2025:i:c:s014098832500502x

DOI: 10.1016/j.eneco.2025.108675

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