Identifying the critical factors of transmission efficiency loss in China’s natural gas network

Abstract

China’s market-oriented reform supports the sustainable development of energy mix and the low-carbon target, and natural gas has bridged the transition from traditional fossil energy to clean and renewable energies. The third-party access policy, launched recently by China’s natural gas market, drives the decouple between gas trade and transport. The decouple might lead to the transmission resources of physical network not optimally used, which is caused by the contractual arrangement between entry and exit capacities in commercial network. Aiming at this issue, we established a mathematical programming with equilibrium constraints (MPEC) to integrate the allocations of commercial capacity and physical flows, based on a minimum cost maximum flow problem (MCMF) abstracted from China’s existing gas network. The MPEC model was then used to strategically evaluate the transmission efficiency, and identify the critical factors of its loss. Our results show that there is transmission efficiency loss of China’s gas network from the shortage of geospatial gas supply and the invisible segmentation of gas network due to interdicted cost of pipeline, bottleneck of pipeline capacity and economic radius of gas supply chains to transport gas. Therefore, the critical factor of the loss to be identified will be helpful for strategically reducing the cost of decoupling gas trade and transport.