Key investment points
Event: on January 29, 2022, the national development and Reform Commission and the Energy Administration jointly issued the guiding opinions on accelerating the construction of a national unified power market system.
The core content of this guidance lies in marketization + Transformation: 1) marketization to restore the commodity attribute of electricity in a larger scale throughout the country; 2) Transformation to improve the adaptability of the power market to a high proportion of new energy. It also puts forward the overall goal for the construction and development of power market during the 14th five year plan and the 15th five year plan: by 2025, the national unified power market system will be preliminarily completed, and by 2030, the national unified power market system will be basically completed.
The proposal of the national unified power market system echoes the previous policy documents of various stages of power reform: 1) the first round of power reform was launched in 2002, and the landmark document is the power system reform plan
(GF [2002] No. 5), the core content is the separation of power plants and networks. It also puts forward that “inter provincial market barriers hinder the formation of inter provincial power market and the optimal allocation of power resources”, and requires “promoting national networking and initially establishing a competitive and open regional power market”. 2) In 2015, a new round of power reform was launched. The landmark document is several opinions of the CPC Central Committee and the State Council on further deepening the reform of power system (ZF [2015] No. 9), which proposed to “gradually form a fully competitive, open, orderly and healthy market system throughout the country”. 3) In February 2020, the national development and Reform Commission and the Energy Administration jointly issued the implementation opinions on promoting the independent and standardized operation of power trading institutions (fgtg [2020] No. 234), which proposed that by the end of 2022, all localities should further standardize and improve the market framework, trading rules and trading varieties in combination with the actual situation, and the trading institutions in Beijing Tianjin Hebei, Yangtze River Delta, Pearl River Delta and other regions should integrate with each other, The power market meeting the requirements of regional economic integration has initially taken shape.
By the end of 2025, a national unified power trading organization system with standardized subjects, complete functions, complete varieties, high efficiency and coordination will be basically established.
Although some directions have been pointed out, this policy document is a guiding opinion, not a construction plan, and the specific details will be seen later: 1) in terms of transaction subjects, in the past inter provincial and inter regional mandatory plans, local governments actually assumed the responsibility of transaction subjects, which limited the choice of market members in the province to a certain extent and strengthened the inter provincial transaction barriers. 2) In terms of transaction principles, at present, inter provincial and inter regional transactions are still dominated by mandatory plans led by local governments. 3) In terms of distribution of transmission channel use right, the current distribution mode of transmission channel use right is relatively extensive, often mixed with “first come, first served”
Type curing distribution.
Transformation is the inevitable trend of the development of the power market. The direction of improving the design of the existing market is to adapt to and promote the construction of new power system: with the increasing proportion of new energy in the installed capacity of power generation, it is impossible for new energy to be outside the market mechanism. Therefore, the opinions puts forward that one is to improve the adaptability of the power market, Enhance the market “liquidity” required by the characteristics of renewable energy, encourage new energy to participate in the market by quoting price and quantity, and put forward for the first time that “the electricity quantity that fails to win the bid will not be included in the assessment of abandoned wind and electricity quantity” and realize peak shaving service through the spot market; Second, in line with the production characteristics of “large power and small capacity” of new energy, promote the traditional units in the new power system from providing “large power and large capacity” to providing “small power and large capacity”, and establish a capacity cost recovery mechanism to meet the needs of this change, Realize that the traditional units mainly rely on providing the effective capacity required by the new power system (i.e. providing “large capacity” during peak load hours) to survive and develop a new return on investment mechanism; Third, explore green power trading, discover the environmental value of green power through market-oriented methods, and do a good job in the effective connection between green power trading, green card trading and carbon emission trading; Fourth, improve the market-oriented Trading Institutions of distributed generation. Encourage “partition wall power sales” and local power balance, so as to realize the organic unity of local balance of new energy and expanding the scope of consumption.
Risk warning: the risk that the process of power market is less than expected; Macroeconomic downside risks, etc
