Wind Power Development and Energy Storage under China's Electricity Market Reform-A Case Study of Fujian Province

This paper, based on the Fujian provincial 500 kV grid and part of the 220 kV grid and the key power plants, including hydro, coal, nuclear, gas, wind and pumping and storage hydro powers (PSHP) connected to the grid, constructs an independent electricity market model. Using data that are very close to reality about coal fired power production costs, along with data about power plants' technical constraints, this paper studies the effect of wind power on Fujian's provincial electricity market. Firstly, the paper analyzes the relationship between wind speed and wind power output and the effects of short-term power output fluctuation on frequency modulation and voltage regulation. Secondly, under supposition of the production costs following quadratic functions, the paper analyzes the effects of changes in wind power output on the electricity supply costs under optimal power flow. Thirdly, using the bidding model in the Australian Electricity Market Operator for reference and supposing that, in a competitive market, coal fired power plants can bid 6 price bands according to their capacity, the paper analyzes effects of wind power on electricity prices under optimal power flow, the stabilizing effects of PSHP and the minimum PSHP capacity needed to stabilize the electricity market. Finally, using a daily load curve, this paper simulates the electricity prices' fluctuation under optimal power flow and PSHP's stabilizing effect. The results show that, although PSHP has a large external social welfare effect, it can hardly make a profit. In the end, this paper puts forward some policy suggestions for Fujian province's wind and nuclear power development, PSHP construction and electricity market development.