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Joint electricity and carbon market for Northeast Asia energy interconnection

2020-07-24

Joint electricity and carbon market for Northeast Asia energy interconnection

东北亚能源互联网中电碳联合市场研究

Tao Ding¹, Runzhao Lu¹, Yiting Xu¹, Qingrun Yang¹, Yuanbing Zhou², Yun Zhang², Ya We²

（1.School of Electrical Engineering, Xi’an Jiaotong University, Beilin District, Xi’an Shaanxi 710049, P.R. China 2.Global Energy Interconnection Development and Cooperation Organization, Xicheng District,Beijing 100031, P.R. China）

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Abstract

Decarbonization of the electricity sector is crucial to mitigate the impacts of climate change and global warming over the coming decades. The key challenges for achieving this goal are carbon emission trading and electricity sector regulation, which are also the major components of the carbon and electricity markets, respectively. In this paper, a joint electricity and carbon market model is proposed to investigate the relationships between electricity price, carbon price, and electricity generation capacity, thereby identifying pathways toward a renewable energy transition under the transactional energy interconnection framework. The proposed model is a dynamically iterative optimization model consisting of upper- level and lower-level models. The upper-level model optimizes power generation and obtains the electricity price, which drives the lower-level model to update the carbon price and electricity generation capacity. The proposed model is verified using the Northeast Asia power grid. The results show that increasing carbon price will result in increased electricity price, along with further increases in renewable energy generation capacity in the following period. This increase in renewable energy generation will reduce reliance on carbon-emitting energy sources, and hence the carbon price will decline. Moreover, the interconnection among zones in the Northeast Asia power grid will enable reasonable allocation of zonal power generation. Carbon capture and storage (CCS) will be an effective technology to reduce the carbon emissions and further realize the emission reduction targets in 2030-2050. It eases the stress of realizing the energy transition because of the less urgency to install additional renewable energy capacity.

Keywords

Joint electricity and carbon market, Northeast Asia Energy Interconnection, Dynamically iterative optimization model.

Fig.1 Market coupling between electricity market and carbon market

Fig.2 Framework of dynamically iterative optimization model

Fig.3 Framework of Northeast Asia power grid interconnection

Fig.4 Load demand of Northeast Asia from 2020 to 2050

Fig.5 Carbon emission targets of Northeast Asia from 2020 to 2050

Fig.6 Transmission capacity in tie lines among six zones

Fig.7 Carbon emission factors in scenarios with and without CCS

Fig.8(a) Electricity price, carbon price, and installed capacity in Russian Far East

Fig.8(b) Electricity price, carbon price, and installed capacity in Mongolia

Fig.8(c) Electricity price, carbon price, and installed capacity in North & Northeast China

Fig.8(d) Electricity price, carbon price, and installed capacity in Japan

Fig.8(e) Electricity price, carbon price, and installed capacity in DPRK

Fig.8(f) Electricity price, carbon price, and installed capacity in ROK

Fig.9 Transferred power generation in tie lines

Fig.10(a) Power generation in Russian Far East with and without interconnection

Fig.10(b) Power generation in Mongolia with and without interconnection

Fig.10(c) Power generation in North & Northeast China with and without interconnection

Fig.10(d) Power generation in Japan with and without interconnection

Fig.10(e) Power generation in DPRK with and without interconnection

Fig.10(f) Power generation in ROK with and without interconnection

Fig.11 Carbon emissions and capacity ratio of renewable energy generation with and without CCS

本文引文信息

Ding T, Lu R, Xu Y, Yang Q, Zhou Y, Zhang Y, Wen Y (2020) Joint electricity and carbon market for Northeast Asia energy interconnection. Global Energy Interconnection, 3(2): 99-110

丁涛, 陆润钊, 许易庭, 杨青润, 周原冰, 张赟, 文亚 (2020) 东北亚能源互联网电力和碳联合市场研究. 全球能源互联网（英文），3(2) : 99-110

Biographies

Tao Ding

received bachelor and master degree at Southeast University, Nanjing, in 2009 and 2012 respectively; Ph.D. degree at Tsinghua University, in 2015. During 2013 and 2014, he was a Visiting Scholar in the Department of Electrical Engineering and Computer Science, University of Tennessee, Knoxville, TN, USA. During 2019 and 2020, he was a Visiting Scholar in the Department of Electrical Engineering and Computer Science, Illinois Institute of Technology, Chicago, IL, USA. He is currently a Professor in the School of Electrical Engineering, Xi’an Jiaotong University. His research interests include power system economic operation, integrated energy system, and power market.

Runzhao Lu

received the B.S. degree from the School of Electrical Engineering, Chongqing University, Chongqing, China, in 2016. He is currently working toward the M.S. degree at Xi’an Jiaotong University. His major research interests include power system optimization and renewable energy integration.

Yiting Xu

received the B.S. degree from the School of Electrical Engineering, Taiyuan University of Technology, Taiyuan, China, in 2017. He is currently working toward the M.S. degree at Xi’an Jiaotong University. His major research interests include power system optimization and renewable energy integration.

Qingrun Yang

received the B.S. degree from the School of Electrical Engineering, Xi’an Jiaotong University, Xi’an, China, in 2017. He is currently pursuing the M.S. degree at Xi’an Jiaotong University. His major research interests include power system optimization and electricity-carbon market.

Yuanbing Zhou

Director of Economic & Technology Research Institute of GEIDCO; Special allowance expert of the State Council; Director of China Renewable Energy Association; Member of the Expert Committee of the Think Tank Alliance of the SOEs. His research interests and experiences are related to energy and electricity strategy, energy policy, clean energy and smart grid, energy interconnection etc.

Yun Zhang

received the doctorate degree in electrical engineering from Tsinghua University in 2008. He is currently working at the Economic & Technology Research Institute of GEIDCO. The subject of his research is energy transition, power market, market investment and financing.

Ya Wen

received the doctorate degree in energy finance from University of Duisburg- Essen in Germany. He is currently working at the Economic & Technology Research Institute of GEIDCO. His research interests are energy trading, electricity and carbon market, financial risk management.

编辑：周舟

审核：王伟

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