A TOU Pricing Mechanism to Promote Renewable Energy Consumption: The Case of the Western Inner Mongolia Grid in China

Abstract

The curtailment of wind power and photovoltaic power is becoming increasingly serious from the year 2012 to present in China. And the small installed capacity captive coal-fired power plants have been developed rapidly aiming to cut production costs. Therefore, by the substitution of renewable energy for captive coal-fired power plants, this paper establishes a time-of-use (TOU) pricing mechanism with a linkage between the supply side and the demand side to promote renewable energy consumption, which is applied to the Western Inner Mongolia grid in China. The results show that the benefits to the grid company, electricity users, renewable energy producers, and social environment are influenced by the quantity of renewable energy purchased in the market, the market price for renewable energy, the quantity of electricity from grid to peak shaving, the carbon price, and the quantity of electricity generated by captive coal-fired power plants shifting to grid, in which the first factor has the greatest influence on the benefits of stakeholders. Furthermore, improving the accuracy of renewable energy generation forecast and optimizing using electricity behaviors by considering the renewable energy generation characteristics could ensure the TOU mechanism implementation successfully.