Design of market mechanism for renewable energy consumption responsibility weight under spot market environment

China Energy Storage Network: Design of market mechanism for renewable energy consumption responsibility weight in spot market environment

Lin Hua1, Yang Minghui2, Gai Chao1, Lin Xiaofan3, Feng Donghan3

(1. State Power Investment Corporation Shandong Branch, Jinan 250002, Shandong, China; 2. Shandong Power Exchange Center Co., Ltd., Jinan 250001, Shandong, China; 3. School of Electronic Information and Electrical Engineering, Shanghai Jiao Tong University, Shanghai 200240, China)

Abstract: The renewable energy consumption responsibility weight system and the construction of the electricity spot market are being promoted simultaneously. In order to coordinate the relationship between conventional power trading products and consumption responsibility weight trading products and realize the smooth implementation of the consumption weight system, a renewable energy consumption weight market mechanism under the spot market environment is designed. The difficulties in implementing the consumption weight system under the background of the spot market are analyzed, and the relevant market mechanism is designed from four aspects: market subjects, trading products, trading methods and cycles, and trading processes. The excess consumption market design involving the power grid subject is innovatively proposed, and the positive significance of the excess consumption market involving the power grid subject in promoting the development of new energy is demonstrated through example analysis.

Citation Information

Lin Hua, Yang Minghui, Gai Chao, et al. Design of market mechanism for renewable energy consumption responsibility weight under spot market environment[J]. China Electric Power, 2021, 54(6): 22-28.

LIN Hua, YANG Minghui, GAI Chao, et al. Market mechanism design of renewable energy accommodation responsibility weight under spot market environment[J]. Electric Power, 2021, 54(6): 22-28.

introduction

As the scale of new energy installations has increased significantly, the subsidy gap has become larger and larger. In order to solve the subsidy gap, in 2017, the National Development and Reform Commission, the Ministry of Finance, and the National Energy Administration issued the "Notice on the Trial Implementation of the Renewable Energy Green Electricity Certificate Issuance and Voluntary Subscription Trading System", allowing new energy companies included in the subsidy catalog to monetize the environmental attributes of wind power and photovoltaics through the sale of green certificates. However, because the green certificate transaction is still in the voluntary subscription stage, parity new energy cannot currently apply for green certificates, the overall price of green certificates is too high, companies are less willing to buy, and secondary transfers are not allowed, so green certificate transactions are not active. As of March 2020, the green certificate sales platform has sold a total of 37,165 green certificates, with a total electricity volume of 37.165 million kW·h.

In addition, the large-scale grid connection of intermittent energy sources such as wind power and photovoltaics has brought heavy pressure on the peak load regulation of the power grid. Although the three northern regions have increased the flexibility of the power grid through cross-regional transactions and the construction of auxiliary service markets, and reduced the power abandonment rate, with the rise of 10 million kilowatt-level parity new energy bases and the large-scale approval of offshore wind power, the development momentum of new energy has not diminished, and the power grid is facing heavy pressure to absorb. In order to improve the absorption capacity of renewable energy and realize China's green energy transformation, on May 10, 2019, the National Development and Reform Commission and the National Energy Administration jointly issued the "Notice on Establishing and Improving the Renewable Energy Power Absorption Guarantee Mechanism" (hereinafter referred to as the Absorption Weight System), which clearly sets the responsibility weight of renewable energy power absorption for power consumption according to provincial administrative regions, and power sales companies including power grids, power users participating in the wholesale market, and enterprises with self-owned power plants are subject to assessment as market entities that bear the absorption responsibility.

On August 7, 2019, the National Development and Reform Commission and the National Energy Administration issued the "Opinions on Deepening the Pilot Work of Electricity Spot Market Construction", proposing that "the corresponding priority power generation of non-hydro renewable energy should cover the guaranteed utilization hours. Each electricity spot pilot area should set up a clear timetable, select clean energy to participate in the electricity spot market by quoting quantity or quoting quantity without quoting, and realize the priority consumption of clean energy". At present, the eight electricity spot market pilot areas in the country [1-5] have started simulation trial operation before the end of June 2019, among which Inner Mongolia, Gansu, Shanxi, Shandong and Zhejiang have clearly stated that new energy will participate in the spot market. How to coordinate and connect various systems such as the spot market, guaranteed hours, consumption weight system, and green certificates has become a difficult problem facing market designers.

Domestic and foreign scholars have conducted a lot of research on the consumption weight system and the participation of new energy in the spot market. Literature [6] designed a renewable energy quota system electricity market system based on China's national conditions; Literature [7-11] proposed a coordination mechanism between the quota system and other markets such as the day-ahead market and the green certificate system from the perspective of promoting the consumption of new energy; Literature [12] focused on the design of the new energy power market mechanism during the market transition period; Literature [13] introduced quota system constraints and wind power dispatch factors, and established a short-term power generation plan model under the renewable energy quota system; Literature [14] selected the German power spot market for data empirical research and pointed out that the real-time electricity price in China's Guangdong power market is more susceptible to the impact of renewable energy power generation rather than forecast errors; Literature [15-17] mainly analyzed the dispatch optimization algorithm of new energy participating in the spot market from the dispatch perspective; Literature [18-21] analyzed the spot market bidding strategy from the perspective of market entities.

Through the summary of existing relevant research, it is found that the research on the consumption weight system rarely involves the spot market, and the coexistence of new energy subsidy policy and consumption responsibility system is not considered in the design of market mechanism. In reality, the new energy subsidy mechanism will coexist with the consumption responsibility system for a long time; the research on new energy participation in the spot market is mostly focused on the scheduling optimization algorithm and the bidding strategy of market players, without considering the full implementation of the consumption weight system. In view of this, this paper, under the background of the coexistence of subsidies and consumption weight system, sorts out the difficulties in implementing the consumption weight system under the spot background, with the goal of promoting the development of new energy, designs relevant market mechanisms, and provides suggestions for the smooth operation of the consumption weight system and the spot market.

1 Difficulties in implementing the consumption weight system in the spot market

Different from traditional fossil energy, new energy has dual attributes of electricity and environment. The current spot market (including the medium and long-term market under the spot environment) mainly considers the electricity attribute of new energy, so new energy needs to declare power generation curves and purchase auxiliary services. Subsidy policies and consumption weight systems focus on the environmental attributes of new energy. The former is incentives from the supply side, and the latter is mandatory from the electricity consumption side. Both focus only on the amount of new energy electricity, not the electricity curve. Although the spot market and the consumption weight system try to take into account the dual attributes of new energy when formulating rules, due to their different focuses, they are easy to cause distortion of new energy market prices (i.e. the monetary value of environmental attributes) in their mutual connection, the inability of new energy consumption to correspond to market entities, and the inability to realize the consumption weight electricity. For the convenience of analysis, cross-regional excess consumption volume transactions and inter-provincial spot markets are not considered for the time being.

1.1 The dual-track system of the spot market will raise the price of new energy market

In view of the reality that China's current power system is planned and marketed in parallel, all provinces that have piloted the spot market have the phenomenon of "dual track" operation of the planned market. On the power generation side, the electricity within the guaranteed utilization hours of heat, new energy and nuclear power, and some hydropower are given priority, and the quantity and price are guaranteed; the electricity outside the guaranteed utilization hours of coal-fired power, new energy and nuclear power, and some hydropower participate in the market. On the electricity consumption side, the primary industry, residents' lives, important public utilities, and public welfare service industries are given priority electricity consumption, do not participate in the market, and are supplied by the power grid as a minimum supply; the electricity consumption of commercial users is fully liberalized and participates in the market independently. That is, the power grid enterprise is equivalent to a power sales company, acting as an agent for non-market users, and providing non-market users with priority electricity such as guaranteed hours of electricity from new energy and thermal power. Other power sales companies and wholesale users participate in the market independently to absorb the market-oriented electricity of new energy and other market electricity.