Optimum subsidy to promote electric boiler investment to accommodatewind power

Abstract

The increasing development of combined heat and power (CHP) plants is exacerbating the wind power curtailment problem in regional power grids during the winter heating season. Electric boilers (EBs) were proposed to be employed within CHP plants to relieve this problem. However, CHP plants usually have no incentive for investing in EBs. Therefore, CHP plants must be incentivized to make such investments through appropriate compensation from beneficiaries, i.e., government and wind farms, although this has not previously been discussed. We propose a game theory model to simulate the impact of government subsidies on EB investment. We analyzed the utilization of the involved parties with the marginal cost and average cost and applied game theory to simulate the investment decisions. Then, an approximate enumeration technique was developed to identify the optimum government subsidy. An actual case of a regional power grid in northern China was investigated to validate the proposed method. A minimum government subsidy to maximize total social benefit was calculated; this subsidy can incentivize wind farms and CHP plants to invest in and use EBs.