Dr. Yang Liu recently had a paper published in the Energy Policy. The paper titled‘Assessing China’s provincial electricity spot market pilot operations: Lessons from Guangdong province’, was coauthored withZhigao Jiang from Zhineng Consultant Company, Bowei Guo from School of Applied Economics, Renmin University of China.

Abstract

Addressing

Aiming at improving the efficiency of power generation, China announced its plan to reform the electricity wholesale market. A focal point of the wholesale market reform is to introduce a stable and reliable electricity spot market. Using Guangdong’s spot market pilot operations as a case study, this article is the first to use rich expost market data to assess the efficacy of China’s electricity spot market. To investigate the stability of the spot market, we estimate the relationship between prices and demand. We find the electricity supply curve is much steeper when demand approaches the capacity limit, suggesting the need to invest more thermal capacity to stabilize spot market prices (SMPs). To investigate the reliability of the spot market, we first estimate the market distortion caused by a price floor on SMPs, and we then examine whether local market power exists. The price floor on SMPs resulted in a welfare transfer from consumers to producers, the monetary value of which equals to 1.3% of the tradable value of the day-ahead market. We also find evidence of local market power in the east of Guangdong, suggesting the need to invest in more power lines connecting the west to the east.

Other information

Publication Date:2022

Journal:Energy Policy

Journal Issue: 164（2022）

DOI: https://doi.org/10.1016/j.enpol.2022.112917

Read the paper here.