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GAME ANALYSIS OF INTEREST GROUPS IN POLICY-PROCESSING OF POWER GRID CONSTRUCTION AND RESEARCH ON COMPENSATION MECHANISMS Liang YAN Huzhou Electric Power Bureau of State Grid – China steven-yanliang@163.com. CONTENT. Introduction On the description of problem How to solve the problem?
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GAME ANALYSIS OF INTEREST GROUPS IN POLICY-PROCESSING OF POWER GRID CONSTRUCTION AND RESEARCH ON COMPENSATION MECHANISMS Liang YAN Huzhou Electric Power Bureau of State Grid – China steven-yanliang@163.com
CONTENT • Introduction • On the description of problem • How to solve the problem? Compensation mechanism Simulation analysis • Research conclusion
1. INTRODUCTION Recent years have witnessed an increase on the conflict existing in construction agents and legal affairs. The policy-processing of grid construction refers to the attainment of agreement between the planner of grid construction and interest groups of external environment.
2. ON DESCRIBING THE PROBLEM MAIN INTEREST GROUPS • Coordinate the economic development of the local life with its social equivalent, improve the related infrastructure and performance of government officials. Local government Local residents • High standard of compensation for grid-construction land expropriation and environmental pursuit. • Fulfill its social responsibility and lower construction cost. Grid company
Upgrade Conflict 2. ON DESCRIBING THE PROBLEM Litigate Coordinated by government Negotiation CONFLICTING PATH Grid Company: Lower construction cost Government: Economic development, Agency fee Residents: Compensation, Environmental pursuit
2. ON DESCRIBING THE PROBLEM MAIN REASON: Local residents of power inputting areas will get the benefit from clean energy while local residents of passing-through areas could not get it but environment pollution and land expropriation.
3. HOW TO SOLVE THE PROBLEM? • Compensation mechanism based on the stakeholder theory Reduce negotiation space of local government and residents in power inputting areas and expand negotiation space of those in areas which transmission line passed through.
3. HOW TO SOLVE THE PROBLEM? • Simulation analysis of the compensation mechanism Check the availability of the compensation mechanism
3. HOW TO SOLVE THE PROBLEM? • Simulation analysis of the compensation mechanism Four interest groups: One grid company Two local governments which grid construction passed through One local governments which electric power is input into
3. HOW TO SOLVE THE PROBLEM? • The decision-making model of local residents in passing through areas
3. HOW TO SOLVE THE PROBLEM? • The decision-making model of local residents in inputting areas
3. HOW TO SOLVE THE PROBLEM? • Simulation analysis of the compensation mechanism Related data of grid company, local government and local residents
3. HOW TO SOLVE THE PROBLEM? • Local residents’ profit and cost simulation analysis Profit curve of local residents without considering stakeholders Profit curve of local residents considering stakeholders
3. HOW TO SOLVE THE PROBLEM? • Local residents’ profit and cost simulation analysis Effort cost curve of local residents without considering stakeholders Effort cost curve of local residents considering stakeholders
4. CONCLUSION Firstly, each interest group would like to make an agreement as soon as possible in the process of negotiation. Local residents Grid companies Local governments
4. CONCLUSION Secondly, the compensation mechanism based on the stakeholder theory would be likely to reduce the compensation degree of inputting areas and increase that of passing-through areas to balance their profit.
4. CONCLUSION Thirdly, compensation mechanism based on the stakeholder theory can effectively reduce the appearance of deadlock during negotiation.