The Price Of Electricity Transaction In Many Places Rises: Can The "Price Hand" Solve The Power Supply Gap?

Recently, state grid power supply companies in some cities such as Shanghai and Changzhou have been busy refuting rumors about rising electricity prices.

21st century economic reporter noted that since August 1, news of "Changzhou adjusting electricity price" and "Shanghai will adjust electricity price" began to spread on some social platforms. Although the reporter consulted the power supply companies of the two places and learned that it was "false news", the discussion on the rise of electricity prices has been heating up in the near future. Just recently, another place has raised the transaction price of the electricity market - the latest document issued by Ningxia development and Reform Commission allows the price of coal and electricity to rise by no more than 10% on the basis of the benchmark price.

Since this year, the complex economic and market situation has brought many practical challenges to the power market. In order to adjust the peak load of power grid and relieve the operating pressure of power generation enterprises, the adjustment of power price mechanism is in progress.

Electricity price fluctuation starts peak shaving attempt

Signals of electricity price fluctuations have been sent out long ago.

On June 24, the national development and Reform Commission (NDRC) pointed out in response to netizens' comments that the next step would be to improve the residential step tariff system and gradually ease the cross subsidy of electricity price, so as to better reflect the power supply cost and restore the attribute of power price.

This statement of the national development and Reform Commission is also understood by some market participants as the price policy is about to be adjusted. On July 29, the price department of the national development and Reform Commission issued the notice of the national development and Reform Commission on further improving the time of use price mechanism (hereinafter referred to as the notice), pointing out that in order to adapt to the new situation and new requirements such as the large-scale development of new energy, the accelerated construction of the power market and the change of the peak valley characteristics of the power system, it is necessary to continuously deepen the market-oriented reform of the electricity price and give full play to the role of the market in determining the price, To form an effective market-oriented time of use price signal.

Since the implementation of residential step tariff system in July 2012, China has been exploring the deepening of electricity price reform. This is a electricity price system with the characteristics of "double track system". The "planned track" is mainly for residents, agricultural users and some industrial and commercial users. The power grid enterprises purchase and sell the electricity under the unified purchase and marketing mode. The power generation enterprises implement the on grid electricity price, and the power grid enterprises implement the sales price. Both kinds of electricity prices are approved by the national development and Reform Commission“ "Market track" is mainly for industrial and commercial users. Power generation enterprises and users conduct direct transactions through market-oriented electricity price, and pay relevant transmission and distribution electricity prices to power grid enterprises according to the use of grid resources.

It is worth mentioning that the industrial and commercial users bear the corresponding cross subsidy, which leads to the low price of domestic residents and the high price of industry and commerce.

In short, the notice proposes to divide peak and valley periods more flexibly and determine the price difference between peak and valley in combination with local conditions, establish peak price mechanism on the basis of peak valley price, and improve seasonal electricity price mechanism.

The more obvious peak valley price highlights the current shortage of power resources in local areas and periods, and also reflects the importance of regulating the peak valley balance.

Since the beginning of this year, affected by the continuous improvement of the economy, China's power demand has been growing steadily. Especially since the beginning of summer, the high temperature weather in many places once again adds a "fire" to the power demand.

According to the data provided by the State Grid of China, in the middle of July this year, China ushered in the first wave of electricity consumption in the summer, with the national daily power consumption breaking the historical record. The load of the regional power grids in East China and central China, as well as the 11 provincial power grids in Guangdong, Jiangsu, Zhejiang, Anhui and Fujian, hit a record high.

As of August 2, the maximum load of Hubei power grid of State Grid reached a record high three times; The power load of Shaanxi Power Grid reached a new record for the second time since this summer, reaching 30.74 million kilowatts, up 21.4% year-on-year; During the same period, the maximum power load of 14 regional power grids, including Chengdu, Suining and Nanchong, successively broke the record.

In addition, according to the data provided by the China Electric Power Enterprises Federation, in the first seven months of this year, the electricity consumption of the whole society reached 4.71 trillion kwh, an increase of 15.6% over the same period of last year.

As a result, the burden of power supply is on power plants.

However, under the background of the dual carbon target, the increment of coal-fired power plants is limited, and the renewable energy installed capacity has an impact on the stability of the power grid. In some regions, the hope of power supply is placed on the gas power plants. However, at the same time, the high demand for electricity has led to a substantial increase in the demand for steam coal and natural gas, and the overall market supply is in a tight state, and the price is soaring.

21st century economic reporter has learned that with abundant liquidity and mismatching of supply and demand worldwide, commodity prices have risen significantly this year. Since July, the prices of steam coal and natural gas have been at high levels while other commodity prices have been cooling. According to the main contract price of steam coal futures, the price rose to a high of 943 yuan / ton from 790 yuan / ton in early July.

The LNG market also shows a trend of not being weak in the off-season and more prosperous in the peak season. According to the data provided by Jin Lianchuang, as of August 13, the price of domestic imported LNG had reached 16.947 US dollars per million British heat, up 365% compared with 3.647 US dollars per million British heat in the same period of last year.

Under the rising fuel prices, the operating pressure of power plants is highlighted. According to the survey conducted by China Electric Power Enterprises Federation, the loss of coal power enterprises in some power generation groups in June has exceeded 70%, and the coal power sector even suffered losses as a whole.

The dual pressure of tight supply and rising costs has pushed up the transaction price in some regions.

Before Ningxia announced that it would allow coal and electricity trading prices to be raised, electricity trading prices in Guangxi, Yunnan and Western Inner Mongolia had already risen. Among them, Guangxi's two departments of manufacturing, industry, commerce and other power users implement the new scheme of time of use price. The floating proportion of electricity price in peak period is 21% higher than the basic price in peak period, 21% in low period, and the maximum difference between peak and valley price is 0.2454 yuan / kWh. The market-oriented transaction price of Yunnan in the first half of the year was 0.24019 yuan / kWh, up 5.8% year-on-year. The western part of Inner Mongolia has made it clear that since August, the transaction price of coal-fired power generation in the electricity trading market can rise by no more than 10% on the basis of the benchmark price (0.2829 yuan / kWh).

A power industry practitioner told the 21st century economic report that in order to meet the demand of electricity at certain peak times, power grid enterprises need to carry out more power grid construction; If we can strengthen the price guidance and realize the "peak shaving and valley filling" of power utilization, we can also reduce the operating costs of power grid enterprises to a certain extent.

Deep meaning behind strong signals

From the "notice on further improving the time of use price mechanism" issued by the national development and Reform Commission at the end of July to the fact that some provinces (cities) allow the transaction price of coal and electricity to rise above the benchmark price, the signal of accelerating the construction of market-oriented electricity price system has become increasingly strong.

Many industry insiders told reporters of the 21st century economic report that under the obvious phenomenon of rising electricity trading prices in many places, the price signal will continue to be transmitted to the demand side, so as to realize "peak shaving and valley filling" and improve the situation of excessive peak power load. And the deeper significance is to ensure the safety of China's power supply during the "14th five year plan".

This is reflected in the notice. The document requires to further improve the time of use tariff mechanism on the basis of maintaining the basic stability of the total sales price level, better guide users to cut peak load and fill valley, improve power supply and demand, and promote new energy consumption, so as to provide support for the construction of a new type of power system with new energy sources as the main body and to ensure the safe and stable operation of the power system.

For China's power structure system, "the 14th five year plan" is the key period to realize multiple transformation.

Since the second half of 2020, the phenomenon of power supply shortage has appeared in many places in China, which is closely related to the change of demand side.

"At present, China's society is getting out of the negative impact of the epidemic. At a time when the traditional kinetic power consumption is gradually recovering, the new electric energy consumption is promoting the total social electricity consumption to exceed the expected growth." A person from an electric power enterprise told the reporter of the 21st century economic report that the power demand of the new kinetic energy will inevitably lead to a gap between supply and demand of China's electric power during the "14th five year plan".

China Electric Power Enterprises Federation predicts that by 2025, the total electricity consumption of the whole society will reach 9.5 trillion kwh, corresponding to a compound annual growth rate of 5%, which is basically equal to the 13th five year plan, and the increment scale will be slightly increased. Among them, the replacement scale of electric energy in the "14th five year plan" will reach 600 billion kwh, accounting for nearly 30% of the newly added power consumption. In terms of the scale of power substitution, the forecast data of Huaneng Energy Research Institute is even worse. By 2025, the scale of electric energy substitution will be 1 trillion kwh.

"The demand for electricity substitution and 5g may become the main driving forces for the growth of electricity consumption during the 14th Five Year Plan period." Haitong Securities analysis that.

In fact, according to the power and electricity balance scheme announced by some provinces, the supply gap may be inevitable this year. Jiangsu Province predicts that the available power resources of Jiangsu Province will be about 120 million kilowatts this summer, and there will be a power supply gap of 425-925 million kilowatts in the whole network; Shandong Province, on the other hand, is expected to have the highest electricity load of 96 million kilowatts during the peak summer period. In case of continuous and extensive extreme weather, the power consumption load of Shandong Province will rise to 100 million kilowatts, and the power supply gap will be expanded to 2-6 million kilowatts.

Structural changes from the supply side will also accelerate the pace of reform of the electricity price mechanism.

Under the guidance of the goal of "carbon peak" and "carbon neutral", the development of China's new energy industry has stepped into a fast lane. According to the information released by the State Energy Administration and other relevant departments, by the end of the 14th five year plan, China's renewable energy power generation will account for more than 50%. And this year, wind power and photovoltaic power generation accounted for about 11% of the total electricity consumption of the whole society, and then increased year by year, reaching about 16.5% by 2025.

"Variable renewable power such as wind and solar power on the supply side is widely connected, and the power supply structure and net load curve have changed greatly. The peak valley period divided by the traditional load curve is no longer suitable for the new development situation." Zheng Xinye, professor and President of the school of Applied Economics of Renmin University of China, recently published a paper that due to the strong uncertainty and uncontrollability of wind power and photovoltaic energy, the volatility, intermittence and uncertainty of power system increase, the complexity of power supply curve increases, and the shape of net load curve changes greatly compared with the original load curve.

In his opinion, the construction of a new power system with new energy as the main body puts forward higher requirements for a more flexible time of use pricing mechanism. The key measure to improve the level of new energy consumption is to guide the demand side response through the price signal and better match the power supply.

"In the trend of large-scale development of new energy, the system cost caused by new energy consumption is rising rapidly, and timely increase of electricity price is also a way to relieve pressure." A brokerage analyst also told reporters of the 21st century economic report.

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