Impact Analysis Of Regulatory Policies On Unit Profitability In Competitive Environment

After the structural reform and the opening of the electricity market, government nolonger guarantee the reasonable return on generation investment, and generation companiesare no longer responsible for ensuring the sufficient electricity supply. So in a competitiveenvironment, how to ensure adequate investments in generation becomes a critical problem.The researches for investment incentives in generation mostly use economical means, butthis article is focused on the impact of government polices on investment incentives ofgenerator owners. In this article influence diagram theory was used to establish unit profitanalysis model. Based on this model, we evaluated the impact of alternative regulatorypolicies on the profit of a generator. These polices are pollution discharge standards, pollutiondischarge fees, price caps and capacity payments. Our research demonstrated that theseregulatory polices have great impact on the profitability of a generator, especially thepollution discharge fees and capacity payments. Rational regulatory policies may inspireinvestments in generation capacity so that the security of electricity supply can be guaranteed .This article provides a new method for the evaluation of regulatory impact on gencos.