Strategy for Cross-Provincial Power Transition Under Renewable Portfolio Standards and Carbon Cap

Abstract

Achieving Zero-carbonizing electricity growth is a priority decarbonization issue. Multi-pronged policies such as TGC, RPS, and CET have been implemented in the power sector. How to deal with the different pressures generated by the above policies in minimizing costs at the same time is an important issue worth discussing. This paper constructs the framework that includes TGC futures trading, carbon emissions trading, and inter-provincial power trading under the quota system. Specifically, we construct the realization cost function of the RPS target, carbon cap and electricity demand, divide the provinces into buyers and suppliers, optimize the power generation, and distribute the gains based on the Shapley Value method. A simulation analysis of four Chinese provinces showed that each province has gained more benefits and less carbon emissions from inter-province trading, resulting in a win-win situation. Those conclusions provide some insightful references for the future development of power market design and decarbonization.