The optimization of Chinese power grid investment based on transmission and distribution tariff policy: A system dynamics approach. (February 2018)

• Record Type: Journal Article
• Authors: He, Y.X.; Jiao, J.; Chen, R.J.; Shu, H.
• Is Part Of: Energy policy. Volume 113(2018)
• Page Start: 112
• Page End: 122
• Publication Date: 2018-02
• Subjects: Power market reform -- Transmission and distribution tariff -- Investment optimization -- System dynamics; Energy policy -- Periodicals; Politique énergétique -- Périodiques; Electronic journals; 333.79
• DOI: 10.1016/j.enpol.2017.10.062
• Languages: English
• ISSNs: 0301-4215

Abstract

Abstract: Grid investment optimization is an effective method for solving the mismatch between investment demand and the investment capacity of power grids. China is carrying out a new round of power system reform, and the main content is to control the revenue of the power grid enterprise through the transmission and distribution tariff policy. Revenue control may make the investment capacity of the power grid enterprise appear even more insufficient than it is currently. This paper studies the influence of the transmission and distribution tariff policy on the cash flow of the power grid enterprise and establishes an investment optimization decision-making model for the corporation using system dynamics theory. Then, taking a city as an example to undertake an empirical analysis, the paper puts forward suggestions and policy implications for the investment decision of the power grid enterprise after the reform of the electricity market. Highlights: The development statuses of electric power marketization reform in China are reviewed. A new power grid investment optimization model on system dynamics is proposed. The feedback relationship between transmission and distribution tariff and power grid investment is determined. The new proposed model has been applied in the case study of a city in China. Policy implications of power grid investment optimization are proposed.