Review of mid-to long-term trading mechanism for renewable electricity consumption in Ningxia, China

Abstract As one of the major renewable energy (RE) generating provinces in China, Ningxia faces the difficulties of RE consumption. This paper reviews the regulatory framework, implementation motivation and relevant provisions regarding Ningxia's mid-to long-term trading mechanism on RE consumption. Currently, the introduction of RE in the electricity market squeezes the market share of thermal generators while the ancillary service market is yet to be established. Under such circumstance, Ningxia government adopts the generation contract transfer trading (GCTT) to ensure the cost recovering of thermal generators. Accordingly, this paper analyzes the strengths and weaknesses of the current mechanism, and proposes suggestions on the policy improvement and market mechanism optimization. Finally, the GCTT and decoupled trading modes are simulated through system dynamics based on the mid-to long-term RE trading mechanism. The simulation results reveal that the concession price ratio is the key factor regarding the development of RE in the GCTT mode. The ratio should be set dynamically based on the market factors. Besides, in the long run, the decoupled model is more suitable for the RE development, where the market balance, market prices and subsidies are the key factors.