The Economic Effect and Influence of Guangdong Power Market Reform
1 research background The market reform in Guangdong will have a regional impact. Like many coastal provinces in China, a large portion of Guangdong's electricity load and annual electricity demand depend on electricity transmission from other provinces. Transmission includes China Southern Power's point-to-point and point-to-point transmission from neighboring provinces, as well as long-distance transmission from large power stations such as the Three Gorges. In recent years, neighboring provinces, especially Yunnan Province, have experienced serious water abandonment problems, and people are paying more and more attention to whether they can send more and more wasted hydropower to Guangdong and at what price. Due to the high dependence of Guangdong's external calls, the Guangdong power market is essentially a regional power market issue. 2 Conclusions and revelations 2.1 Overall conclusion This study examines the economic effects and impact of Guangdong's electricity market reforms. We find that under the impetus of power market reform, total electricity costs (fixed costs and operating costs) can be reduced by 210-63 billion yuan (9-27%) per year, and production costs are reduced by 12 billion yuan (13%) per year. CO2 emissions. An increase of 6 million tons (3%). The three main reasons for these results are: (1) the net income of coal-fired power companies is reduced, because the current benchmark price determined by the government is very high relative to its cost (at least in 2016); (2) Coal-fired power replaces gas-fired power generation because natural gas power generation costs are higher than coal-fired power prices; (3) the reduction in average energy consumption of coal-fired and natural gas generating units makes the unit more efficient. Under market scheduling, the unified market clearing price is about 300 yuan / megawatt hour (MWh). This average market price is significantly lower than the current benchmark price of coal-fired power plants (450 yuan / MWh), which highlights the sharp decline in net income of coal-fired power companies, and raised concerns about their financial solvency. In addition, the province's coal-fired power generating units account for about 60% of Guangdong's peak demand for power generation, ensuring system reliability. Market reforms have also depressed net income for natural gas, nuclear, wind and solar power companies, but have slightly increased the income of hydropower companies. In order to meet the development of renewable energy and carbon dioxide emission reduction targets, it may be necessary to pay to power generation companies in the form of scarce income and premium subsidies. We explored two scenarios to provide subsidies for fossil energy power generation companies (coal, natural gas) to provide scarce income and non-fossil energy (hydropower, nuclear, wind, solar) power generation companies. (1) Under the scenario of low scarcity income and subsidy payment (low SPP), all local power generation and external power adjustment during the peak demand period will receive 100 yuan/kW•year scarce payment due to its capacity contribution, while non-fossil Energy generators pay a premium subsidy, which is the difference between the benchmark on-grid price and its market income plus scarce income; 2) Under the high SPP scenario, fossil energy generators get 400 yuan/kW due to the capacity contribution to peak load. In the year, non-fossil power producers were also subsidized. The low SPP scenario has nothing to do with how power companies earn scarce revenue. For example, capacity markets or scarce backup pricing can also generate scarce revenue. In the high SPP scenario, we assume that some form of administrative expenditure is given to fossil energy generators because the price may be higher than the market entry cost of generating capacity. The high SPP scenario represents an upper bound estimate of the scarcity payments and subsidy payments that generators may have. The high SPP scenario corresponds to the lower limit of total power generation cost savings (21 billion yuan), which shows that even in the marketization scenario, even if subsidies are given to power generation companies, it can bring considerable cost savings to consumers. 2.2 Sensitivity The results are sensitive to the setting of four variables: (1) net transfer of electricity, (2) fuel prices for coal and natural gas, (3) hydro, solar and wind power, and (4) carbon dioxide prices. (1) Power transfer. The serious abandonment of water in Yunnan indicates that the current externally regulated electricity in Guangdong is lower than the economically effective level. The increase in externally regulated electricity (currently accounting for 28% of annual electricity generation) has reduced the total electricity supply costs in Guangdong Province and CO2 emissions in the province, but also reduced the net income of fossil energy power producers in the province. Imports increase by one percentage point – about 5.5 billion kWh – to offset the increased carbon dioxide emissions from coal-fired power generation. (2) Fuel price. Fuel price changes will be rapidly transmitted in the electricity market environment, and there has been a great lag between China's fuel price changes and on-grid electricity price changes. Therefore, the reference point for measuring the cost of reforms affecting the Chinese market is not the change in fuel prices but the final market outcome. Our analysis shows that higher (lower) coal and natural gas prices will reduce (increase) the market's savings in total power generation costs. The results of the analysis are much more sensitive to coal prices than natural gas prices, because in the simulated electricity market scenario, natural gas generation accounts for a much smaller proportion (less than 1%) of total electricity generation. Coal prices as long as more than 1,100 yuan / ton of standard coal (38% higher than the actual price of 2016) is enough to make consumers disappear from the cost of electricity market reform. The fuel price level of coal and natural gas also determines the cost saving space for gas-to-coal conversion, that is, the higher natural gas price (coal price) increases (decreases) the production cost. (3) Hydropower, wind energy and solar energy. A large number of hydropower, wind and solar power generation in the province tend to drive down market prices and net income of power generation companies, while reducing production costs and CO2 emissions. The results of the analysis are less sensitive to incremental changes in wind and solar power generation, as these resources currently account for only a small fraction (2%) of total electricity generation in Guangdong. The base year we analyzed (2016) is the Year of the Flood. The reduction in hydropower run time has had a major impact on market prices, total power generation costs, production costs and CO2 emissions. Between hydropower imports and hydropower generation in the province, the Guangdong power market is very sensitive to changes in hydropower output. (4) CO2 price. Since coal power in Guangdong's power system accounts for a large proportion (60 GW), the simulation results are very sensitive to CO2 prices. In the short term (no new installed capacity, the external power is unchanged), carbon dioxide pricing only affects the dispatch of coal and natural gas units. Considering the huge difference between natural gas and coal prices, when the price per ton of CO2 is higher than 200 yuan, a significant substitution of natural gas power generation for coal power can be realized. But rising carbon dioxide prices will greatly increase market costs, because all loads will pay for the incremental cost of carbon dioxide emissions. For example, a price of 200 yuan per ton of CO2 will increase the overall market cost by 50%. By returning carbon dioxide quota auction proceeds or carbon tax revenues to consumers, the impact on retail electricity prices can be partially mitigated, but the increase in costs is also partly reflected in the higher economic rents of power plants. 2.3 Policy implications This study focuses on four key issues in the design of the Guangdong power market: How to determine the "boundary" of the balance area is a key and sensitive issue in the design of the Guangdong power market. Allowing power generation companies in neighboring provinces to participate in the Guangdong wholesale electricity market will increase the amount of electricity transferred to Guangdong. Increasing the purchase of electricity will reduce the electricity costs and power generation emissions in Guangdong Province, while reducing the scarcity price or capacity payment required to maintain the target level in Guangdong. However, more outsourcing electricity will also reduce the net income of power generation companies in Guangdong Province and lead to a net transfer of economic rents to neighboring provinces. Market-driven high-power transfer will also put upward pressure on electricity prices and carbon dioxide emissions in neighboring provinces by generating clear opportunity benefits. These are, in a sense, “classic issues†because these problems often arise between high-quality resource centers and load centers around the world. This problem usually needs to be resolved through negotiation. For example, for Guangdong, a higher level of purchased electricity will have an adverse income impact on the province's generating units. The solution may be to provide some compensation to local power generation companies, preferably by establishing a market like capacity. Competitive pricing mechanism. A more cost-effective solution is to enable power generation companies in other provinces to participate more fully in Guangdong's resource balance through a regional wholesale market covering the entire southern power grid, and may reduce the total cost of scarce payments to power generation companies. The high reliance on external calls may increase market price volatility in Guangdong, as a large part of Guangdong's external power regulation is hydropower. This volatility is currently stabilized by planning the operating hours of the generator set. But in a market environment, both power generation and demand side – grid companies and competitive retail suppliers – will be affected by market price volatility. Promoting a higher proportion of external calls also requires addressing the cost of transmission and its distribution. At present, cross-provincial and inter-regional transmission costs have been included in the grid price. The most cost-effective way to solve the cost of transmission is to separate its pricing and distribution from the wholesale market. This means that the transfer/recall (net exchange) size is determined between provinces based on marginal cost, rather than on average power generation costs and transmission costs. There are other short-term options between ideals and current practices, such as transmission rights, for the allocation of inter-provincial transmission costs and more economical scheduling between provinces. Market-oriented transformation may need to address the impact on the net income of power producers. Like many coastal provinces in China, there are three conditions in Guangdong that result in large differences between current (reference) and market costs: (1) higher local average feed-in tariffs; and (2) potential for existing transfer capacity Insufficient utilization indicates that the scale of externally regulated power should be increased by economic factors; (3) Under the high level of transfer, the excess power generation capacity is sufficient to meet the minimum cost and reliability standards. Under the assumption that coal prices have risen significantly, these conditions indicate that the average market price on the coast will be much lower than the current average benchmark on-grid price. Lower market prices may bring revenues from power generation companies in Guangdong Province and other coastal provinces closer to their marginal costs. However, net income may also be lower than the fixed cost requirements of existing power generation companies to maintain their ability to pay, which may result in them having to seal or decommission the units necessary to meet system reliability requirements to meet environmental compliance requirements. If you need to get extra income from the energy (and ancillary services) market to solve the "income shortage" problem of the generator set, you will inevitably face the choice of specific measures. This challenge is by no means unique to Guangdong or China. All organized power markets in the United States have solved this problem in some form, and international experience in this area is well documented. In addressing the issue of real income above market equilibrium prices, compensation related to market transitions must be separated from payments related to reliability or environmental attributes. Since all power generation companies operating in Guangdong are actually state-owned, there may not be sufficient reasons to provide market transition payments to power generation companies to compensate for the book value of some or even all of their assets. In terms of payment reliability and environmental attributes, if power producers and demand-side resources in neighboring provinces can guarantee Guangdong's electricity services, competitive pricing mechanisms—such as capacity markets or scarce standby pricing to guarantee reliability and purchasing obligations for clean energy— - Can reduce the cost of Guangdong consumers. However, this may result in lower power plant revenues in the province and may also transfer economic rents to neighboring provinces. Therefore, the design of this mechanism should be considered from a political perspective and requires special caution. Environmental regulation is an important consideration in the reform of the electricity market. The Pearl River Delta is one of the three regions in China that need to achieve a significant drop in PM2.5 concentration by 2017. However, short-term power market reforms may increase coal-fired power generation in the province, which is not conducive to achieving air quality targets. Therefore, ensuring that the results of power market reforms are consistent with air quality and greenhouse gas emission reduction targets is an important issue that energy regulators and environmental regulators need to address together. China’s regulation of power plant emissions has been concentrated on individual emission standards (end-of-pipe or chimney guidelines). However, to meet pollution concentration targets and greenhouse gas reduction targets, it is necessary to switch to zero-emission generator sets. However, the current domestic discussion on the most appropriate mechanism for power transformation, such as carbon market, emission tax, and clean energy procurement obligations, is still at a relatively preliminary stage. The biggest benefit of Guangdong's electricity market reform should be its long-term benefits. The potential short-term cost savings brought about by China's electricity market reforms are mostly from the cost of power generation companies to consumers – this is actually a legacy of previous planned economies and unfinished reforms. In the long run, the biggest benefit of market reforms is the improvement and improvement of operational and investment efficiency brought about by the economic framework of short-term operations and long-term investments. Market prices can help optimize the level and composition of new power and energy storage investments, as well as the full participation of demand-side resources to provide adequate backup for the market. Ac In Cable,Ac Adapter Cord,Ac Adapter Cable,Ac Power Cord Cable Changshu Herun Import & Export Co.,Ltd , https://www.herunchina.com
As the largest provincial economy and the largest power consumption province in China, Guangdong Province has always been the backbone of China's reform and opening up. In 2015, it began the pilot reform of wholesale competition in the power market. The content is for large industrial users to sign medium- and long-term power purchase contracts directly with power producers, or to purchase electricity through competitive power retailers. In order to promote the development of this market, the government and the power industry jointly established a power trading center to sign long-term bilateral contracts and organize monthly concentrated power bidding. 