Can natural gas-fired power generation break through the dilemma in China? A system dynamics analysis

Recently, the share of natural gas in the generation of electricity has shown a dramatic increase in China. However, the domestic natural gas source, natural gas price and unclear policy environment are the barriers lying on the development way of natural gas power generation. This paper aims to evaluate development pattern and constraints in the development of China's natural gas power generation by system dynamics methodology. The natural gas price for generation is predicted by market netback pricing method which sets up price linkage mechanism and bundles the natural gas price with alternative energy price. The downturn of international oil market pushes natural gas price down. In spite of the over-demand domestic natural gas market, the long term Take-or-Pay Clauses provide a guarantee for adequate gas supply. Hence, the natural gas price and source are no longer the case. Meanwhile, the promotion policies including subsidy and emission trade scheme are analyzed. As a result, the natural gas power generation will witness explosive development with an average annual growth rate of about 10%. By 2030, natural gas generation installed capacity will reach 235.7 GW. (C) 2016 Elsevier Ltd. All rights reserved.