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Incentive Mechanism of Micro-grid Project Development

Author

Listed:
  • Yong Long

    (School of Economics and Business Administration, Chongqing University, Chongqing 400030, China)

  • Yu Wang

    (School of Economics and Business Administration, Chongqing University, Chongqing 400030, China)

  • Chengrong Pan

    (School of Economics and Business Administration, Chongqing University, Chongqing 400030, China
    School of International Business, Sichuan International Studies University, Chongqing 400031, China)

Abstract

Due to the issue of cost and benefit, the investment demand and consumption demand of micro-grids are insufficient in the early stages, which makes all parties lack motivation to participate in the development of micro-grid projects and leads to the slow development of micro-grids. In order to promote the development of micro-grids, the corresponding incentive mechanism should be designed to motivate the development of micro-grid projects. Therefore, this paper builds a multi-stage incentive model of micro-grid project development involving government, grid corporation, energy supplier, equipment supplier, and the user in order to study the incentive problems of micro-grid project development. Through the solution and analysis of the model, this paper deduces the optimal subsidy of government and the optimal cooperation incentive of the energy supplier, and calculates the optimal pricing strategy of grid corporation and the energy supplier, and analyzes the influence of relevant factors on optimal subsidy and incentive. The study reveals that the cost and social benefit of micro-grid development have a positive impact on micro-grid subsidy, technical level and equipment quality of equipment supplier as well as the fact that government subsidies positively adjust the level of cooperation incentives and price incentives. In the end, the validity of the model is verified by numerical analysis, and the incentive strategy of each participant is analyzed. The research of this paper is of great significance to encourage project development of micro-grids and to promote the sustainable development of micro-grids.

Suggested Citation

  • Yong Long & Yu Wang & Chengrong Pan, 2018. "Incentive Mechanism of Micro-grid Project Development," Sustainability, MDPI, vol. 10(1), pages 1-19, January.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:1:p:163-:d:126531
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