Managing Low Carbon Technology Options in the Electricity Sector: A Case Study of Guangdong Province in China

Dr Xi Liang, University of Exeter

The aim of this paper is to develop a decision-analytical framework for analysing technical options available in a power generation system. Guangdong province is the largest province in China in terms of gross domestic product (GDP) and permanent residents. Being one of the most developed regions in China, it has been nominated by the central government of China to pilot low-carbon development. By applying the proposed approach, we evaluate possible technical options which Guangdong province can use to facilitate its low carbon development and attempt to generate an optimal portfolio to achieve its economic and carbon intensity reduction targets up to 2020 and 2050. The study integrates five key technical options in potential new energy generation portfolios to satisfy 200 TWh incremental annual electricity demand in Guangdong from 2016-2020, including (a) natural gas combined cycle; (b) offshore wind; (c) unabated coal; (d) coal with carbon capture and storage (CCS); (e) nuclear. To simulate a wide spectrum of uncertainties, we assume the global research, development & deployment rate, GDP growth rate, fossil-fuel price, carbon price are exogenous. The model takes into account operational flexibilities incl. intermittency, inflexbility as well as investment flexibilities incl. early closure, retrofitting to CCS. We also run a sensitivity analysis on key assumptions such as the drift rate and volatility of carbon price, technology learning rates, GDP growth rate and fossil fuel price. As a result, the study generates a number of energy technology portfolios for the energy system in Guangdong. We will also provide the portfolio rebalancing strategy from the perspective of energy planning policymakers in Guangdong province.