Impact of carbon allowance allocation rules on the revenue of coal power sector

doi:10.12006/j.issn.1673-1719.2022.181

Abstract

Abstract:

Based on the current situation of China’s coal power and the development trend of carbon market and power market, the impact of carbon allowance allocation rules on power generation revenue of 1000 MW, 600 MW and 300 MW coal-fired units under six carbon prices and three pass-through rates were simulated with economic dispatch model. The results show that the 300 MW units are sensitive to the change in carbon allowance baseline and auction ratio. At the initial period of the coupling between carbon market and power market with carbon price of CNY 50.0 yuan/t, CNY 79.9 yuan/t and a pass-through rate of 20%, if allowances baseline drops to 0.74 t CO₂/(MW∙h) or the auction ratio rises to 50%, 300 MW and 600 MW units will have negative returns. However, when the carbon price and its pass-through rate increase, the negative effect on coal power units caused by the change in carbon allowance baseline and auction ratio is more manageable. The expansion of certified emission reduction ratio has little effect on the improvement of unit revenue, which can be a beneficial supplement to carbon market and be controlled. Therefore, after full consideration of coal power capacity and competitiveness, it is necessary to formulate carbon allowance allocation rules to adapt to the development stages of carbon market and power market, actively promote the coupling of the two markets to pass through carbon costs and cooperate with the offset mechanism to accelerate carbon emission reduction.

Key words: Carbon allowance, Coal power, Economic dispatch model, Power generation revenue, Pass-through rate

LIU Yuan-Xin, LUO Xu, ZHANG Wei-Rong, YUAN Jia-Hai. Impact of carbon allowance allocation rules on the revenue of coal power sector[J]. Climate Change Research, 2023, 19(3): 334-346.

Figures/Tables 11

Fig. 1 Prediction of the workday load curve of coal-fired units in Guangdong power grid in 2020

Table 1 Coefficients of coal-fired units’ fuel costs and carbon emission

Table 2 Technical coefficients of coal-fired units

Fig. 2 Illustration of the allocation and surrender of allowance in carbon emission trading market for coal power enterprises

Table 3 Scenarios settings under three periods of carbon market and power market coupling

Fig. 3 Output of coal-fired units under three periods of carbon market and power market coupling

Fig. 4 System marginal price under three periods of carbon market and power market coupling

Table 4 Rules settings of carbon allowance allocation

Fig. 5 Comparison of the impact of carbon allowance baseline on coal-fired unit revenue under different periods of carbon market and power market coupling

Fig. 6 Comparison of the impact of carbon allowance auction on coal-fired unit revenue under different periods of carbon market and power market coupling

Fig. 7 Comparison of the impact of CCER offset ratio on coal-fired unit revenue under different periods of carbon market and power market coupling

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