Promoting wind power in China : welfare analysis of Mandated Market Share (MMS)

Abstract

Along with people’s profound recognition of the importance of wind power, countries are seeking for feasible and effective policy regimes or mechanisms to explore and develop wind power, and China is no exception. Therefore, Mandated Market Share(MMS) policy on promoting wind power is selected as the focus of this study. A welfare-maximizing model is first developed and is trying to represent a real power market, where the wind power and the coal-fired power are used simultaneously. And then, the welfare analysis is used to investigate the social optimization problems with and without MMS. Also, the policy is investigated in competition and monopoly market organizations to see which market organization is more efficient with MMS. Finally, through welfare analysis and the relevant discussion this study tells us why we need MMS policy on promoting wind power.