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The Scientific World Journal
Volume 2012, Article ID 841636, 7 pages
Research Article

Case Study on Incentive Mechanism of Energy Efficiency Retrofit in Coal-Fueled Power Plant in China

1Key Laboratory of Urban Stormwater System and Water Environment, Ministry of Education, Beijing University of Civil Engineering and Architecture, Beijing 100044, China
2Beijing Climate Change Response Research and Education Center, Beijing University of Civil Engineering and Architecture, Beijing 100044, China
3Key Laboratory of Development and Application of Rural Renewable Energy, Biogas Scientific Research Institute of the Ministry of Agriculture, Chengdu 610041, China
4Water Environment System Project Laboratory, Chinese Research Academy of Environmental Sciences, Beijing 100012, China
5Department of Environmental Science and Engineering, Beijing University of Chemical Technology, Beijing 100029, China

Received 6 September 2012; Accepted 31 October 2012

Academic Editors: B. Chen, Z.-M. Chen, and H.-S. Tang

Copyright © 2012 Donghai Yuan et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


An ordinary steam turbine retrofit project is selected as a case study; through the retrofit, the project activities will generate emission reductions within the power grid for about 92,463 tCO2e per annum. The internal rate of return (IRR) of the project is only −0.41% without the revenue of carbon credits, for example, CERs, which is much lower than the benchmark value of 8%. Only when the unit price of carbon credit reaches 125 CNY/tCO2, the IRR could reach the benchmark and an effective carbon tax needs to increase the price of carbon to 243 CNY/tce in order to make the project financially feasible. Design of incentive mechanism will help these low efficiency enterprises improve efficiency and reduce CO2 emissions, which can provide the power plants sufficient incentive to implement energy efficiency retrofit project in existing coal-fuel power generation-units, and we hope it will make a good demonstration for the other low efficiency coal-fueled power generation units in China.