Can the renewable power consumption guarantee mechanism help activate China's power trading market?

Abstract

The renewable power consumption guarantee mechanism aims to promote local consumption of renewable power through power trading in the inter-provincial market and provincial market. This study aims to investigate whether the renewable power consumption guarantee mechanism can actively affect the power trading market. The difference-in-difference method is proposed to evaluate the impact of by selecting the pilot provinces in power spot trading as the treatment group and the rest provinces as the control group. The empirical results show that the renewable power consumption guarantee mechanism has a positive net effect on the power trading market. Several important factors, such as the power demand response of industrial users and the participation of power sales companies, influence power trading activities. We discuss the possible reasons from the perspective of power generation side, power sale side and power user side. To promote the development of power market, the inter-regional trading mechanism of renewable power need to be improved. When the power market is gradually fully competitive, the establishment of a national unified green power trading market should be considered. Meanwhile, policy incentives should further encourage power sales companies to play a significant role in promoting development of power trading market and renewable energy.