Economic dispatch savings in the coal-fired power sector: An empirical study of China

The current equal share dispatch approach has often been criticized for its negative influence on the electricity system operation in China, which worsens the energy security, environmental sustainability and affordability problems. To provide references for the on-going electricity market reform, this study employs an optimization model to quantify the economic dispatch savings in the coal-fired power sector. Key findings are summarized as follows: (1) The heat rates of 2803 coal generators in China range from 273.91 gce/kWh to 348.38 gce/kWh units in 2014, and the great differences among these generators at different geographical areas exhibit the necessity for economic dispatch. (2) 5.67% of the coal used for power generation could be saved from economic dispatch in a provincial level, the monetary value of which can reduce the average electricity price by 0.0058 yuan/kWh in 2014. (3) Three major political and economic challenges hinder the transition from the current dispatch mode to economic dispatch, namely the insufficient running hours for cost recovery, limited cross-border trading due to electricity over-supply and local protectionism, and the political economy problems from generators of different ownership types.