Analysis of the hydropower generation cost and the affordability of the hydropower on-grid price in Tibet

This study systematically investigated electricity production cost in Tibet and analyzed the affordability of the on-grid price for newly built hydropower plants. According to the investigation, the ratio of the power generation cost to the power transmission and distribution cost is 5:5 in Tibet's Central grid, whereas the ratios are 4.5:5.5 and 6:4 in the Changdu and Ali grids, respectively. It was determined that the increased financial expense of newly built independent power plants is the main cause of their higher electricity production cost. Based on the particular conditions prevalent in Tibet, we established a new affordability evaluation model that takes into account the local resident living standard, the potential for cost reduction for industrial production, the capacity for surrendering profits, and the capability of transferring price for each industry. The results indicate that the highest affordable on-grid price of the Central, Changdu, and Ali grids are 0.3274, 0.2398, and 0.9212 RMB/kW h, respectively. These values do not meet the breakeven point for a newly built hydropower plant, which indicates a serious electricity price problem. In this article, alternatives are investigated for mitigating the mismatch between the hydropower generation cost and the local affordability of the on-grid price to protect the investment motivation of independent power enterprises. The alternatives considered are the acceleration of electrical system reform in Tibet, the value added tax rebate for independent hydropower enterprises, and extension of loan payment periods for power generation enterprises.