Lianbiao Cui
Anhui University of Finance and Economics
China
Title: Economic evaluation of Chinese electricity price marketing based on a dynamic computational general equilibrium model
Biography
Biography: Lianbiao Cui
Abstract
The Chinese government has accelerated the pace of electricity market reform in recent years. The primary objective is to create a market-oriented electricity price which can accurately reflect the relationship between market supply and demand, resource scarcity, and the cost of environmental damages. This study adopted a dynamic computational general equilibrium model of China (CDECGE) to conduct quantitative assessment of the economic impact of Chinese electricity market reform. As abatement policies may affect electricity price significantly, the carbon intensity reduction targets for China in 2020 and 2030 were also accounted for during simulation. The results show that the reform is beneficial for energy saving and carbon emission reduction. Compared to results under regular electricity price, the total primary energy consumed from 2016 to 2030 under market-oriented electricity price will decrease by 5.01%, while the accumulated carbon emission will decrease by 4.70%. The marketization of electricity price also benefits reduced abatement cost in China, where the accumulated GDP from 2016 to 2030 would be about 1012.80 trillion RMB – an increase of nearly 0.25% compared to that under regulated electricity price. This paper also finds that the economic cost of electricity market intervention is very high for China, as the government need to pay a large amount of subsidies to keep the electricity price at a relatively low level. Marketization reform may also exacerbate inflation, although it is not obvious. The findings altogether demonstrate that electricity price marketization may result in multiple economic benefits, and the research could also provide a useful reference for the electricity market reform for Chinese policy makes.