Chinese power-grid financial capacity based on transmission and distribution tariff policy: A system dynamics approach

• Published in: Utilities policy 2019-10, Vol.60, p.100941, Article 100941
• Main Authors: Wang, Yongli, Zhang, Fuli, Zhang, Yuanyuan, Wang, Xiaohai, Fan, Lisha, Song, Fuhao, Ma, Yuze, Wang, Shuo
• Format: Article
• Language: English
• Subjects: Financial capacity; Power-grid companies; System dynamics; Transmission and distribution tariff reform
• ISSN: 0957-1787; 1878-4356
• DOI: 10.1016/j.jup.2019.100941

With reforms, the Chinese power grid is transitioning to a more dynamic and competitive power market. Transmission and distribution tariff policies have changed the profit model and influence the financial capacity of the Chinese power-grid companies. This study analyzes the specific content of the reform, the calculation related to each component of power-grid financial capacity, and the interaction and feedback characteristics among the components. On this foundation, we establish a financial capacity model using the system dynamics theory. Taking a power-grid company as a case to undertake empirical and sensitivity analyses, we put forward management strategies and policy recommendations. •Discuss policy implications with an explicit concern on investment capacity issue.•Define the interaction and feedback characteristics between the components of investment capacity.•Establish a system dynamics calculation model of power grid investment capacity.•The investment capacity of power grid companies will keep growing in the future.