The Paradox of “Dual Protection” in China’s Coal-fired Power Industry

The original intention of the capacity-based electricity price for coal-fired power was to reduce the dependence of coal-fired power units on revenue from electricity generation, enabling them to undertake more functions of peak shaving, reserve, and peak supply guarantee; however, mandatory medium- and long-term contracts have locked in a large amount of electricity generation and corresponding revenue for coal-fired power. The superposition of these two mechanisms has both squeezed the space for the consumption of clean electricity and reduced the pressure on inefficient coal-fired power to exit the market.

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