Challenges on Generation Right Trading for Supporting Renewable Integration

With the increasing consumption of renewable energy, such as hydropower, wind and solar energy, renewable energy has become one of the main generating resources in China. Generation right trading market has been established in China to facilitate the trade of generation right from the power plant with high emission to the power plant with low emission. Firstly, this paper performs systematic and in-depth theoretical stage on generation right trading, optimized models and algorithms respectively, aiming at summarizing the advantages and disadvantages of various generation right trading models and algorithms. Based on analyzing the current situation of generation right trading and power market mechanism, this paper summarizes the root causes of the inactive generation right trading market. Second this paper discusses the challenges of the current trading mechanism from three aspects. They are operational difficulties, imperfect trading mechanism and regulatory issues. Finally, this paper proposes some enhancements to the future generation right trading for encouraging trading with renewable generation. Those enhancements would promote the consumption of renewable energy and the optimal allocation of resources.