Impact of cap-and-trade mechanism on investment decision of new electric power system.

Under the background of cap-and-trade mechanisms, this article constructs a game model of the electricity supply chain, which is dominated by electricity generators and followed by electricity sellers, taking into account the situation of electricity generators investing in renewable energy and energy storage under the grandfathering mechanism (GM) and benchmarking mechanism (BM). By comparing the equilibrium solutions in different cases, the research finds that (1) compared with the grandfathering mechanism, the benchmarking mechanism has more investment in renewable energy and higher energy storage quality; (2) in the consumer market, compared with GM, the electricity price and the electricity demand are higher under BM; (3) an increase in the renewable energy preference coefficient or carbon price will lead to an increase in the electricity wholesale price, renewable energy investment, energy storage quality, electricity price, and electricity demand. Further, an increase in the energy storage cost coefficient or renewable energy investment cost coefficient will result in lower electricity wholesale price, renewable energy investment, energy storage quality, electricity price, and electricity demand; and (4) the profit of the generator under GM is higher than that under BM when the total carbon quota is larger, while the profit of the generator under BM is higher than that under GM when the unit carbon quota is larger.