Association for Public Policy Analysis & Management

Virtually all provinces in China have engaged in market-based mechanisms that take away a portion of government-allocated production quotas and give to competitive bidding. Market designs, implementation and oversight are heterogeneous and primarily determined at the provincial level, raising questions about their effectiveness. Through roughly 60 interviews conducted in 4 regions of China, several examples of markets are analyzed along dimensions of market behavior and efficiency. An electricity systems operation model is formulated and solved to integrate institutional and engineering considerations on operations. Findings indicate most reform experiments will not particularly advantage renewable energy integration, and may in fact cause greater difficulties if inflexibilities in operation are maintained.