Optimizing the Power Generation Structure for Low Carbon Development Target in China: A Comparison Study of Endogenous and Exogenous Technology Improvements

Abstract The power generation system will play a decisive role in realizing China’s low carbon development goals. When identifying the optimized power generation structure to meet a set of given low carbon goals, the technology parameters are an important determinant of the results. In previous studies, most models exogenously set the technologies’ cost changes, which usually bring a great bias. This article establishes an endogenous (for solar photovoltaic and wind power generation technology costs) optimization model of China’s power sector and simulated the sector from 2014 to 2040. Two scenarios were built to investigate the optimized performance of the power sector: the Business as Usual scenario (BAU) and the Intended National Determined Contribution scenario (NDC). In addition, this paper compares the differences in the optimization results under the two methods for treatment of technology change in the model, exogenous and endogenous. In the BAU scenario, emerging technologies account for 40.7% of the total installed capacity in 2040. Due to the variation of the costs in the exogenous setting, the solar power and other emerging technologies develop slowly and the optimization results are significantly different from that of the endogenous setting. In the NDC scenario, the proportion of emerging technologies increases more, accounting for 43.7% of the total installed capacity, of which wind power and solar power account for 12.2% and 11.5% respectively, and the total CO2 emissions peak around 2033. We conclude from the comparison that, for the NDC scenarios, although there are some differences in investment cost in the first few years, different settings for technology change in the model don’t significantly affect the renewable energy demand and final policy decisions.