We spoke with Jiang Lin at LBNL regarding China's electricity system and how to design the EPS to be as applicable as possible. Based on his explanation of the electricity system and also based on structure in the US for vertically integrated utilities, we need a control lever toggle (to start, could eventually become a policy lever) for how the capacity payment/revenue structure is dealt with.
Currently, the model operates a single capacity market for all resources and pays out the capacity price to all resources based on their availability in the binding hours.
However in China and in some vertically integrated markets, utilities contract with operators for specific plants and assure them cost recovery (recovery of all their costs) over the long term. These are individual plant contracts and not paid out to the entire electricity fleet.
To represent this correctly we need to provide a control switch that changes how the capacity mechanism is paid out. This shouldn't affect the actual structure on Electricity - Main or Electricity - BAU. It would primarily affect cash flows on Electricity - Cash Flow and the wholesale electricity prices.
We spoke with Jiang Lin at LBNL regarding China's electricity system and how to design the EPS to be as applicable as possible. Based on his explanation of the electricity system and also based on structure in the US for vertically integrated utilities, we need a control lever toggle (to start, could eventually become a policy lever) for how the capacity payment/revenue structure is dealt with.
Currently, the model operates a single capacity market for all resources and pays out the capacity price to all resources based on their availability in the binding hours.
However in China and in some vertically integrated markets, utilities contract with operators for specific plants and assure them cost recovery (recovery of all their costs) over the long term. These are individual plant contracts and not paid out to the entire electricity fleet.
To represent this correctly we need to provide a control switch that changes how the capacity mechanism is paid out. This shouldn't affect the actual structure on Electricity - Main or Electricity - BAU. It would primarily affect cash flows on Electricity - Cash Flow and the wholesale electricity prices.