%0 Journal Article
%K China
%K CO2 emissions
%K Southern grid
%K Power Market reforms
%K Dispatch modeling
%A Nikit Abhyankar
%A Jiang Lin
%A Xu Liu
%A Froylan Sifuentes
%B Resources, Conservation and Recycling
%D 2020
%G eng
%P 104558
%R 10.1016/j.resconrec.2019.104558
%T Economic and environmental benefits of market-based power-system reform in China: A case study of the Southern grid system
%V 153
%8 01/2020
%! Resources, Conservation and Recycling
%X <p>China, whose power system accounts for about 13% of global energy-related CO2 emissions, has begun implementing market-based power-sector reforms. This paper simulates power system dispatch in China’s Southern Grid region and examines the economic and environmental impacts of market-based operations. We find that market-based operation can increase efficiency and reduce costs in all Southern Grid provinces—reducing wholesale electricity costs by up to 35% for the entire region relative to the 2016 baseline. About 60% of the potential cost reduction can be realized by creating independent provincial markets within the region, and the rest by creating a regional market without transmission expansion. The wholesale market revenue is adequate to recover generator fixed costs; however, financial restructuring of current payment mechanisms may be necessary. Electricity markets could also reduce the Southern Grid’s CO2 emissions by up to 10% owing to more efficient thermal dispatch and avoided hydro/renewable curtailment. The benefits of regional electricity markets with expanded transmission likely will increase as China’s renewable generation increases.</p>