Economic Decision-Making for Coal Power Flexibility Retrofitting and Compensation in China

Chunning Na, Jiahai Yuan, Yuhong Zhu and Li Xue
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Chunning Na: School of Physics & Electronic-Electrical Engineering, Ningxia University, Yinchuan 750021, China
Yuhong Zhu: School of Physics & Electronic-Electrical Engineering, Ningxia University, Yinchuan 750021, China
Li Xue: School of Physics & Electronic-Electrical Engineering, Ningxia University, Yinchuan 750021, China

Sustainability, 2018, vol. 10, issue 2, 1-22

Abstract: In China, in order to integrate more renewable energy into the power grid, coal power flexibility retrofitting is imperative. This paper elaborates a generic method for estimating the flexibility potential from the rapid ramp rate and peak shaving operation using nonlinear programming, and defines three flexibility elastic coefficients to quantify the retrofitted targets. The optimized range of the retrofitted targets determined by the flexibility elastic coefficients have a reference significance on coal power flexibility retrofitting. Then, in order to enable economic decisions for coal power flexibility retrofitting, we address a profit maximizing issue regarding optimization decisions for coal power flexibility retrofitting under an assumption of perfect competition, further analyzing the characteristic roots of marginal cost equal to marginal revenue. The rationality of current compensation standards for peak shaving in China can also be judged in the analysis. The case study results show that economic decision-making depends on the compensation standard and the peak shaving depth and time. At a certain peak shaving depth and time, with rational compensation standard power plants are willing to carry out coal power flexibility retrofitting. The current compensation standard in Northeast China is high enough to carry out coal power flexibility retrofitting. These research conclusions have theoretical significance for China’s peak shaving compensation standards formulation.

Keywords: flexibility retrofitting; flexibility elastic coefficients; economic decision-making; compensation standard (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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