Regulatory Mechanisms of Gas for Power Generation in Electricity Markets in China

The Chinese government has promoted the natural gas use for the purpose of emissions reduction and diversification of energy supply. One of gas supply sources is liquefied natural gas (LNG) import. The large scale LNG projects need stable gas consumers like gas-fired power plants. The objective of this paper is to analyze the challenges faced by the gas-fired power plants in the context of Chinese electricity sector and gas industry, to analyze the role of gas power generation and to propose the regulatory mechanism. As an example, the case of the LNG project in Shanghai has been studied. The results show that generally, gas-fired power plant is less competitive compared to coal-fired plants but its economic feasibility can be improved under certain market conditions and regulatory mechanisms. Finally we propose a set of regulatory recommendations based on the research