To mitigate climate change impacts and achieve low-carbon transformation, China has accelerated the development of renewable electric power, including hydro, wind, and solar power, especially since the launch of Renewable Energy Law in 2005. The proportion of renewable power in national electricity generation has increased from 14.9% in 2007 to 26.7% in 2018 (China Renewable Energy Engineering Institute, 2019). Under the Paris Agreement, China has committed to increase the share of non-fossil fuels in primary energy consumption to around 20% and peak its carbon emission by 2030 or even earlier years (Duggan, 2015; Tollefson, 2016; Tan et al., 2018). Both the volume and proportion of renewable power generation are expected to increase rapidly and persistently in the coming decades (Dai et al., 2016; Li et al., 2015; Ansari Mohd et al., 2020). By 2040, renewable energy is projected to account for over 35% of China's power generation (International Energy Agency (IEA), 2018). The development of renewable energy, replacing fossil fuels and fossil-fuel-fired electricity, would effectively cut down China's carbon dioxide (CO2) and air pollutants (Dai et al., 2016; Dai et al., 2017; Zhou et al., 2019), and also impact the national GDP and employment (Dai et al., 2011; Mittal et al., 2016; Mu et al., 2018; Li et al., 2019).
However, the development of China's renewable energy is experiencing several challenges, of which the curtailment of renewable power is the most serious one. Due to technological issues and problems with planning and policy, a considerable proportion of installed renewable power capacity cannot generate electricity accommodated by power grid (Li et al., 2015; Pei et al., 2015; Lu et al., 2016; Dong et al., 2018; Tang et al., 2018; Liu et al., 2018a, Liu et al., 2018b). In 2016, the curtailment rates of wind and solar power reached a peak of 12.7% and 9.9%, respectively (National Energy Administration, 2017). Studies have shown that curtailment of renewable electricity can adversely affect the development of the renewable energy industry by reducing enterprises' profits and lowering down investors' confidence (Fan et al., 2015; Zhu et al., 2019). Moreover, due to much smaller emission intensity of renewable electricity, the curtailment may result in more than expected emissions of CO2 and air pollutants, such as sulfur oxide and nitrogen oxide (Ang and Su, 2016; Su and Ang, 2017; Karasoy and Akcay, 2019).
An increasing number of studies have focused on the strategies to reduce renewable electricity curtailment, and attempted to evaluate the impacts of such strategies in terms of economy and environment. These studies have suggested several strategies to minimize renewable electricity curtailment, including technological progress, planning improvement, and incentive policies (Zhao et al., 2012; Fan et al., 2015; Luo et al., 2016; Tang et al., 2018; Liu et al., 2018a, Liu et al., 2018b; Cui et al., 2020). Li et al. (2015) initially calculated the reduction of fossil fuel consumption, GHG emissions, and air pollutants caused by possible utilization of curtailed renewable electricity; however, they assumed an equal replacement for non-renewable electricity by renewable electricity. The actual substitution between non-renewable and renewable electricity in the economic system, affected by reducing renewable electricity curtailment and guided by relative price changes, has not been empirically examined in the previous studies.
Some of the previous studies have also analyzed the impacts of renewable energy policies using computable general equilibrium (CGE) models. These studies have used different nesting structures of electricity sectors with various assumptions on substitution relationship between electricity and different power sources (Liang et al., 2014; Mu et al., 2018; Dai et al., 2011; Chateau et al., 2014). Most of the CGE models used in previous studies can be categorized into two groups: the ones assuming the direct substitution between electricity regardless of power sources, and the others assuming the substitution between stable and intermittent electricity. Adding further complexity to the analysis was that the previous studies employed different values of CES (constant elasticity of substitution) function. With different nesting structures and substitution elasticities, the previous studies using CGE models have generated large discrepancies in the simulation results, which send mixed signals to the policy-makers (Liu and Lu, 2015; Yuan et al., 2017; Feng et al., 2018).
We have identified three significant research gaps in the existing literature on the topic. First, very few economic studies have explicitly simulated the curtailment of renewable electricity with CGE models. Second, the previous studies have not analyzed the actual replacement of non-renewable electricity by renewable powers in the economic system affected by reducing renewable electricity curtailment. Third, different nesting structures of electricity with varying substitution elasticities are seldom compared to empirically evaluate the importance of substitution elasticities in explaining the disparity of simulation results. To our knowledge, none of the previous studies has provided an in-depth quantitative assessment of the economic and environmental feasibility of reducing renewable electricity curtailment in China.
As renewable energy development has become indispensable for combatting climate change and realizing China's low-carbon transformation, addressing the renewable power curtailment challenge with synthetic introspection and consciousness on the economic and environmental feasibility is a crucial area of research. Unless alternative policy measures are put into practice, the high curtailment rates will harm China's bid to achieve a low-carbon economy by shattering investors' confidence and wasting valuable resources in the renewable energy sector. This study contributes to the existing literature in the following perspectives: 1) an improved approach to simulate renewable electricity curtailment with the CGE model is developed. 2) The actual replacement of non-renewable electricity by renewable electricity is examined under the reduction of renewable electricity curtailment. 3) The role of substitution elasticities in explaining the disparity in simulation results is assessed through the model comparison. To achieve these goals, we use a dynamic multi-sectoral CGE model with alternative CES functions and different substitution elasticities for electricity sectors to capture the economic and environmental effects of reducing renewable electricity curtailment in China, and examine the disparity on simulation results between CGE models through the model comparison.
The remainder of this study is organized into four sections. Section 2 introduces the latest situation of renewable electricity curtailment in China. Section 3 describes the simulation model and methodology. The results for the impacts of reducing China's renewable electricity curtailment on power generation, emission of CO2 and air pollutants, and macroeconomy are presented in section 4. The last section concludes this study with several policy implications.

该文章以“Economic and climate impacts of reducing China's renewable electricity curtailment: A comparison between CGE models with alternative nesting structures of electricity”为题，发表在《Energy Economics》 Volume 91, September 2020, 104892