The new round of power system reform has been carried out for more than three years. With the strong promotion of local governments and relevant national departments, various provinces and regions have implemented varying degrees of development and utilization plans. In 2017, market-oriented trading electricity reached 26% of the total social electricity consumption. The development and utilization plans have achieved significant results in at least three aspects:
One is to cultivate the market awareness of power generation enterprises and large users entering the market. Power generation companies are gradually realizing that the marketization of power generation has truly arrived and is irreversible. They are actively conducting research on marketing and response strategies; Electricity major users who participate in market-oriented transactions experience the dividends brought by marketization, while also recognizing the risks and contractual responsibilities of the market. As a result, electricity sales companies gradually realize their value.
Secondly, in a market with oversupply, market-oriented transactions have reduced the electricity costs for large industrial users, effectively promoting the stability and development of the local economy.
Thirdly, it effectively suppresses the investment and construction of coal-fired power projects.
The marketization of electricity has also brought some new problems and challenges to the power industry, which need to be resolved through further development of electricity consumption plans and continuous improvement of market trading mechanisms and market systems. The comprehensive relaxation of power generation and consumption plans for key industries and their implementation plans (hereinafter referred to as the "Document" and "Implementation Plan" respectively) has put forward some clear requirements and guiding opinions to address these issues and further develop power consumption plans.
The transition period from a planned to a market-oriented approach in power operation organization is too long, which can lead to new imbalances in interests and even new cross subsidy issues. On the one hand, the main power generation entities participating in market-oriented transactions are coal-fired power enterprises. In the situation of market oversupply and rapid development of renewable energy generation, the annual power generation utilization hours of coal-fired power units have been decreasing year by year, and the price of market-oriented electricity has also decreased. Compared with other types of power generation units, the power generation efficiency of coal-fired power units has significantly decreased;
On the other hand, in the past two years, under the situation of oversupply in the electricity market, the electricity prices of participating market trading users can reflect the market supply and demand situation in a timely manner. The electricity prices in some areas have also decreased significantly, and users who are not allowed to enter the market can only wait for the government's general adjustment of electricity prices policy. Therefore, it is necessary to continue to orderly promote the entry of various types of power users and power generation enterprises into the market, promote the optimization of power resource allocation and improve the energy efficiency of the whole society through fair competition among various power generation enterprises and fair electricity consumption of various types of power users.
The document requires that "various regions should further clarify the time for opening up various types of power generation and consumption enterprises to enter the market, clarify the proportion of opening up, and formulate specific work plans based on the actual situation." It also provides the prerequisite conditions for various types of power sources to enter the market according to China's clean energy transmission from the west to the east, renewable energy consumption policies, nuclear power development, comprehensive utilization of compliant self owned power plants, and the rise of distributed development.
Electricity is a secondary energy source. Once the supply and demand situation reverses or the price of coal increases significantly, electricity users entering the market will also face the risk of rising electricity prices. Electricity users may choose to withdraw from the market, resulting in the market mechanism being unable to operate effectively and sustainably. The power industry is a link in the entire industry chain. To truly achieve electricity marketization, its upstream and downstream markets must develop in coordination, establish a risk hedging mechanism for the entire industry chain, and play a fundamental role in optimizing resource allocation and ensuring social and economic stability and high-quality development. The most basic risk hedging mechanism is the medium - to long-term trading mechanism related to the prices of products in the upstream and downstream markets. Considering the insufficient development of China's financial market, the document encourages market entities to explore the medium - to long-term contract price correlation mechanism in the electricity and its upstream and downstream product markets, and to explore the establishment of a risk hedging mechanism for the entire industry chain product market.
The implementation plan selects power users in key industries such as coal, steel, non-ferrous metals, and building materials as the first pilot for the comprehensive development and utilization of electricity plan in 2018, further expanding the scale of market transactions, in order to "streamline and connect the price marketization mechanism of the power and its upstream and downstream industries, form a pattern of price linkage, benefit sharing, risk sharing, and coordinated development throughout the entire industry chain", and effectively promote the stable and healthy operation of China's market economy. Electricity is not only a means of production, but also a means of livelihood. Residents' daily lives and various industries cannot do without electricity, and they are all electricity users. Considering the low proportion of electricity consumption and lack of bargaining power among residents and agricultural production electricity users, as well as the relatively low price elasticity of electricity demand in service industries such as hotels, shopping malls, finance, and real estate, and the lack of market awareness and experience among some electricity users, the four key industries of coal, steel, non-ferrous metals, and building materials have a high degree of marketization and strong market awareness, and have experience in participating in electricity market-oriented transactions in the early stage. They are more suitable as pilot projects for the comprehensive development and utilization of electricity. The document encourages them to sign medium - and long-term contracts with upstream and downstream enterprises for 3-5 years or even longer, effectively prevent and control business risks, and optimize production arrangements.
The document supports various regions to accelerate the opening up of eligible users to enter the market according to local conditions, and provides suggestions on the conditions and sequence for opening up various types of users to enter the market, mainly including: actively supporting the entry of high value-added emerging industries and advantageous characteristic industries in various regions, and market access may not be limited by voltage levels and electricity consumption; Industrial parks, industrial parks, and economic and technological development zones can participate in market-oriented transactions as a whole as a large user, with the park as a unit; In regions where a time of use market pricing mechanism has been established, commercial enterprises outside of large industrial areas, and even users who prioritize purchasing electricity, can voluntarily enter the market with the conditions for time of use electricity metering and electricity bill settlement; Under the condition of formulating sound power supply guarantee measures, public service industries such as railways, airports, municipal lighting, water supply, gas supply, and heating are gradually entering the market. It is also encouraged that public service industries such as water supply, gas supply, and heating, as well as energy-saving service companies, engage in electricity sales, cultivate comprehensive energy suppliers, and improve the efficiency and effectiveness of energy utilization. In order to ensure the orderly operation and sustainable development of the electricity market, the document stipulates that market entities cannot exit the market or re implement government pricing within three years after choosing to enter the market.
In order to further promote the consumption of clean energy and optimize the allocation of power resources on a large scale, the document also explicitly requires that "all regions should lift restrictions on market entities participating in cross provincial electricity market transactions, and gradually open up cross provincial transactions of market entities
In short, from the documents and implementation plans, it can be seen that the country is determined to gradually promote the comprehensive development and utilization of electricity plans. However, the specific steps, time nodes, and implementation plans for the development and utilization of electricity plans in various regions still need to be studied and formulated by local governments and relevant institutions based on the actual situation of local power supply structure, electricity consumption structure, and spot market pilot construction, according to local conditions.
