Orderly liberalization of all coal-fired power generation feed-in tariffs, an important step in the market-oriented reform of electricity-Finance News


The “Notice on Further Deepening the Market-oriented Reform of Coal-fired Power Generation On-grid Tariffs” (hereinafter referred to as the “Notice”) issued by the National Development and Reform Commission shows that the on-grid tariffs for all coal-fired power generation will be liberalized in an orderly manner. Increase the fluctuation range of coal-fired power generation market transaction price from the current float not more than 10%, and in principle not more than 15%, to expand to not more than 20% in principle, and the market transaction price of high energy-consuming enterprises will not be increased by 20%. limit.

On October 12, at a press conference of the National Development and Reform Commission, Wan Jinsong, Director of the Price Department of the National Development and Reform Commission, stated, “This reform is to’liberate the two ends’, that is, the development of electricity-side on-grid tariffs and user-side sales. Significant progress has been made in electricity prices, marking another important step in the reform of the electricity market.”

In principle, all coal-fired power generation will enter the electricity market, and a market-based electricity price mechanism has been established that “can fall and rise”

Since the beginning of this year, the global energy industry has undergone new changes. Energy prices in the international market have continued to rise, and electricity prices in some countries have risen sharply; domestic coal and electricity supply and demand have continued to be tight, and power restrictions have occurred in some places.

The Party Central Committee and the State Council are highly concerned about this. On October 8th, the State Council executive meeting made special arrangements to promote coal mine production increase, prioritize coal transportation, and implement taxation and finance policies under the premise of ensuring safe production to support coal power companies to increase power supply, reform and improve the market-oriented formation mechanism of coal power prices, etc. A series of measures will be deployed to ensure the supply of electricity and coal for this winter and next spring.

In order to implement the decisions and deployments of the Party Central Committee and the State Council, the National Development and Reform Commission quickly introduced this reform measure.

“According to the overall requirements of the power system reform to’control the middle and liberalize the two ends’, the reform has made important progress in the’opening up of the two ends’, which is embodied in two’orderly liberalization’.” Wan Jinsong introduced.

On the power generation side, the on-grid tariff for all coal-fired power generation will be liberalized in an orderly manner. Coal-fired power generation accounts for a high proportion of electricity in my country, and coal-fired power generation on-grid tariffs play an “anchor” role in the formation of on-grid tariffs on the power generation side. At present, about 70% of coal-fired power generation has formed a feed-in tariff through participation in the power market.

“The “Notice” clearly promotes the remaining 30% of coal-fired power generation to enter the power market, which will further drive other types of power generation power to enter the market, laying a solid foundation for the full development of power-side feed-in tariffs.” Wan Jinsong said.

On the electricity consumption side, orderly liberalize electricity prices for industrial and commercial users. At present, about 44% of industrial and commercial electricity consumption has formed electricity prices through participation in the market. The “Notice” clearly stated that the orderly promotion of industrial and commercial users to enter the electricity market, purchase electricity at market prices, and cancel the industrial and commercial catalog sales price. Among the industrial and commercial users who have not yet entered the market, the industrial and commercial users of 10 kV and above consume large amounts of electricity and have good market conditions, and all enter the market; other industrial and commercial users should also enter the market as soon as possible. At that time, only the residential and agricultural categories will remain in the catalog sales price, which will basically achieve “full release”.

At the same time, the “Notice” clarified that for industrial and commercial users who have not directly purchased electricity from the power market, the power grid companies will purchase electricity as an agent, and the agent power purchase price will be established through a market-based method; when the grid company first sells electricity to the agent user, at least one amount in advance is required Inform users every month to ensure a smooth transition of reforms.

“This reform is another important step in the market-oriented reform of the electricity market. It has truly established a market-oriented electricity price mechanism that can fall and rise.” In the long run, it will accelerate the development of medium and long-term power trading, spot market and auxiliary service market construction, promote the high-quality development of the power industry, support the construction of new power systems, and serve the green and low-carbon transformation of energy. It will also play an important role in accelerating the reform of the electricity generation and consumption plan and the reform of the electricity sales side system and other reforms of the power system.

The market transaction price of energy-intensive enterprises is not subject to a 20% increase, which promotes industrial and commercial users to enter the market

“After the recent significant increase in coal prices, the coal-fired power generation transaction price in some local power markets has risen, which has played a positive role in alleviating the operating difficulties of coal-fired power generation companies.” said Peng Shaozong, deputy director of the Price Department of the National Development and Reform Commission, expanding the market. The fluctuation range of trading electricity prices is conducive to better play the role of market mechanisms, allowing electricity prices to more flexibly reflect the power supply and demand situation and cost changes, and to a certain extent alleviate the operating difficulties of coal-fired power generation companies, encourage companies to increase power supply, and better protect power Safe and stable supply.

It is particularly worth noting that the “Notice” pointed out that the market transaction price of energy-intensive companies is not subject to a 20% increase.

Wan Jinsong said that curbing the blind development of “two highs” projects is an inherent requirement for achieving high-quality development. The disorderly development of high-energy-consuming industries will increase the pressure on power supply, which is not conducive to the development of green and low-carbon transformation.

“It is clear that the market transaction price of high energy-consuming enterprises is not subject to a 20% increase, which is conducive to guiding the market transaction price of high-energy-consuming enterprises to rise more. This can more fully transmit the pressure of rising power generation costs and curb unreasonable power consumption. Improve the power supply and demand situation; it is also conducive to promoting high-energy-consuming enterprises to increase investment in technological transformation, improve energy utilization efficiency, and promote the transformation and upgrading of industrial structure.” Wan Jinsong said.

Fully liberalize the on-grid tariffs for coal-fired power generation and encourage industrial and commercial users to enter the market. Will it increase business costs?

“Under the situation of tight electricity supply and demand, market transaction electricity prices may rise, which will push up the electricity cost of industrial and commercial enterprises to a certain extent, but it needs to be divided into user categories. For high-energy-consuming enterprises, it is necessary to increase it. Pay. For other industrial and commercial users, electricity costs account for a relatively low proportion of total costs. Market transaction electricity prices will rise to a certain extent, and corporate electricity costs will increase, but the overall cost is limited.” Peng Shaozong explained.

Taking into account the situation of different users, the National Development and Reform Commission has also made targeted arrangements. One is to promote the entry of industrial and commercial users into the market in an orderly manner in accordance with the situation, and establish an agent power purchase mechanism for power grid companies to ensure smooth implementation. The second is to encourage local governments to implement phased preferential policies for small and micro enterprises and individual industrial and commercial households. The third is to continue to implement a series of relief measures that have been introduced to support the development of private enterprises, financing for small, medium and micro enterprises, and manufacturing investment.

Maintain stable electricity prices for residents and agriculture, and reforms have limited impact on price levels

The “Notice” pointed out that the price of electricity for residents and agriculture should be kept stable. Residents (including schools, social welfare institutions, community service centers and other public welfare users that implement residential electricity prices), agricultural electricity supply is guaranteed by grid companies, and the current catalog sales electricity price policy is implemented. All localities should give priority to using low-cost power sources to ensure electricity consumption for residents and agriculture.

“The reform always puts the protection of people’s livelihood in an important position. After the reform is implemented, residents and agricultural users will purchase electricity and use electricity as before. The method has not changed, and the electricity price level will remain the same.” Wan Jinsong said that the reform has an impact on the consumer price index. (CPI) has no direct impact and has limited impact on price levels.

In order to ensure the smooth implementation and effective implementation of reforms, the “Notice” clarified a number of safeguard measures.

One is to comprehensively promote the construction of the power market. Orderly liberalize various power generation plans, improve the power market system, and accelerate the cultivation of qualified power sellers.

The second is to strengthen the connection with the time-of-use electricity price policy. Speed ​​up the implementation of the time-of-use electricity price policy, introduce a peak electricity price mechanism, and do a good job of linking market transactions with the time-of-use electricity price policy.

The third is to avoid unreasonable administrative intervention. All localities are required to promote the construction of electricity markets in strict accordance with relevant national policies, and no intervention in the reasonable fluctuation of market transaction electricity prices.

The fourth is to strengthen the supervision of the coal power market. Investigate and punish violations of laws and regulations in a timely manner to maintain a good market order; guide power generation companies, especially coal-electricity joint ventures, to participate in power market quotations reasonably.

The “Notice” will be implemented on October 15, 2021. If the current policies are inconsistent with the “Notice”, the provisions of the “Notice” shall prevail.

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Editor in charge: Wang Xiang

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