Analyzing cost of grid-connection of renewable energy development in China.

Renewable energy is believed to be the central issue in sustainable development. Literatures on renewables׳ costs are rather sparse, especially on costs of integration and system balancing. The objective of this paper is to fill the research gap by providing an assessment for the cost of China׳s grid-connected renewable energy development and analyze its sharing between different stakeholders. Due to China׳s pricing mechanism of renewable energy and their cost decreasing potential, the pricing model of feed-in tariff and dynamic technological learning processes are employed. In the estimation of purchasing cost, the positive bias is overcome by considering China׳s energy-saving dispatching policy. The results suggest that purchasing cost would be 32.57–40.80 billion Yuan over 2012–2020, and peak in 2017. Grid integration costs which further involve costs of grid infrastructure and system balancing are also investigated. We find that grid infrastructure will cost 27.88 billion Yuan by 2015 and soar to 45.32 billion by 2020, while system balancing will cost 31.49 billion Yuan in 2015 and 63.97 billion Yuan in 2020 among which a substantial part (over 60%) comes from electricity loss in energy transfer. The different parts of these costs are underwritten by disparate participants due to China׳s renewable energy policies and its institutional arrangement. Purchasing cost is shared by power consumers through RES; the cost of grid infrastructure is mainly covered by grid enterprises; and there is no mechanism to specify how to share the cost electricity loss during system balancing which might become a major obstacle for system balancing. [ABSTRACT FROM AUTHOR]