Regarding the state's policy that gives a higher on-grid electricity price to natural gas CHP (combined heat and power) projects, this paper studies the effect of it on the operation of those projects by theoretical analysis and a case study. It concludes that on-grid electricity price on the high side, compared to heat price, will lead power plants to produce more electricity but less heat, thus causing decrease of the plants' thermal eff iciency and harm to energy saving of the whole society.
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