Pumped storage hydro power’s function in the electricity market under the electricity deregulation background in China – A case study of Fujian province

Dunguo Mou

Energy & Environment, 2019, vol. 30, issue 6, 951-968

Abstract: This paper constructs Fujian province’s independent electricity market system, based on the province’s 500 kV backbone grid structure and key power plants, simulates the electricity market functioning under optimal power flow when it is marketised, and analyses the price fluctuation space for pumped storage hydro power to operate. Because of the spatial distribution characteristics of power plants and demand load nodes, there are differences across the local marginal prices; as demand loads ramp, the local marginal prices fluctuate; when the electricity market is fully deregulated, the price fluctuation scale depends on the design of trading mode and demand supply situation. Electricity price fluctuation provides space for pumped storage hydro power to develop and earn profit; while the pumped storage hydro power arbitrages in the electricity market, it can improve the demand supply situation at valley and peak load periods and depress price soaring, and the social external positive effect is much higher than is pumped storage hydro power’s internal profit. There is no guarantee that pumped storage hydro power can earn profit just by arbitraging in the market. In the end, this paper puts forward some policy suggestions for pumped storage hydro power development and electricity marketisation.

Keywords: Electricity system; electricity marketisation; price fluctuation; local marginal prices; pumped storage hydro power (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:sae:engenv:v:30:y:2019:i:6:p:951-968

DOI: 10.1177/0958305X18813727

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