Core summary
First, the opinions set the stage goal of taking 2025 and 2030 as the boundary. In the future, China needs to focus on solving complex problems such as market linkage, unification and improvement of inter regional transaction rules, and further separation of government and enterprises in regional power transactions. With the advancement of reform, the role of the power market in promoting China’s energy structure adjustment and helping the dual carbon goal will gradually increase.
Second, the opinions put forward a number of important tasks, such as improving the multi-level unified power market system, improving the functions of the unified power market system, and optimizing the trading and market mechanism. We believe that ① in terms of market system, due to the uneven distribution of medium Shanxi Guoxin Energy Corporation Limited(600617) resources, China will strengthen investment in power infrastructure and services in the short term and optimize the market environment for energy structure reform under the goal of “double carbon”; At the same time, the development path of power market is more likely to be “regional interregional national”, accumulating new energy trading experience step by step. ② In terms of market functions, with the continuous improvement of the proportion of new energy power generation, the medium and long-term trading varieties and trading frequency in the power market will continue to increase. The pilot of spot trading is expected to continue to expand, and the auxiliary services are expected to accelerate. ③ In terms of market and trading mechanism, new energy and green power trading are expected to develop rapidly. With the optimization of market environment, the development environment of all kinds of new energy will be more stable.
Third, the reform of power market will bring investment opportunities to thermal power, new energy and auxiliary markets. Among them, ① in terms of thermal power, the power supply and demand is expected to be further optimized and balanced, and the coal cost will be orderly transmitted to the downstream. Reduce the pressure of power generation and peak shaving of thermal power units. ② In terms of new energy, the construction of the national unified power market will help to improve the penetration of new energy power generation. Among them, distributed photovoltaic and decentralized wind power have more flexible development speed or advantages due to the rate of return on investment. ③ In the auxiliary market, the demand for such consulting services has increased, and the power auxiliary service market also has good development prospects.
On January 28, 2022, the national development and Reform Commission and the Energy Administration issued the guiding opinions on accelerating the construction of the national unified power market system (hereinafter referred to as the opinions), which determined the phased objectives and key tasks of China’s unified power market system, marking the entry of China’s power market reform into the deep water area. Power market-oriented reform is not only a part of China’s power system reform and even the reform of state-owned enterprises, but also a necessary measure to promote China’s energy structure adjustment and help achieve the dual carbon goal. Key contents include:
1) overall objective: refine the two-stage objectives, and strengthen the role of power market reform in helping to achieve the dual carbon goal
The opinions set the stage objectives with 2025 and 2030 as decomposition. In the first stage, i.e. during the 14th Five Year Plan period (2025), the national unified power market system has been preliminarily completed, the national market operates in coordination with the provincial (District, city) / regional market, the integrated design and joint operation of medium and long-term power, spot and auxiliary service markets, the market-oriented allocation of resources across provinces and regions and the scale of green power transactions have been significantly improved, which is conducive to new energy The market transaction and price mechanism for energy storage and other development has initially taken shape; In the second stage, that is, during the Tenth Five Year Plan period (2030), the national unified power market system will be basically completed to meet the requirements of the new power system. The national market will operate jointly with the provincial (District, city) / regional market. New energy will fully participate in market transactions, market players will compete equally and make independent choices, and power resources will be further optimized nationwide. The two-stage objectives have further clarified the reform route of China’s power market. The “coordinated operation” of markets at all levels in 2025 and the “joint operation” in 2030 mean that China needs to focus on solving complex problems such as market linkage, unification and improvement of inter regional trading rules, and further separation of government and enterprises in regional power trading in the future, It is also necessary to adapt to the development of new energy and energy storage, promote the cross regional use efficiency of new energy power generation and power consumption through the market mechanism, and help China achieve the dual carbon goal.
2) key task 1: improve the multi-level unified power market system
The opinions put forward four main tasks, namely, accelerating the establishment of national power market, steadily promoting the construction of provincial (District, city) / regional power market, guiding the coordinated operation of power markets at all levels, and orderly promoting the opening-up and cooperation among inter provincial and inter regional markets. Among them, ① in the part of national power market, the opinions first proposed “studying and promoting the timely establishment of national power trading center”; ② In the part of regional market establishment, it is proposed to “encourage Beijing Tianjin Hebei, Yangtze River Delta, Guangdong, Hong Kong and Macao to establish corresponding regional power markets”; ③ In the part of coordinated operation and regional opening, it is proposed to “support the integrated development of provincial (District, city) market and national market when conditions are ripe, or integrate the development with national market after multiple provinces (District, city) jointly form regional market”, and “release the cross provincial and cross regional priority power generation plan according to the principle of first increment and then stock”. We believe that: ① due to the uneven distribution of new energy resources among regions in China, for example, hydropower resources are mainly concentrated in the southwest, and wind power resources are mainly concentrated in the southeast coast, northeast and northwest. Superimposed wind power, photovoltaic and other new energy have the characteristics of power generation instability, Cross regional transactions and even national transactions are necessary means to promote the efficiency of Shanxi Guoxin Energy Corporation Limited(600617) power generation and consumption. In the short term, China will strengthen investment in power trading infrastructure and services, unify inter regional trading rules, and provide a basis for cross regional transactions. ② The more likely path to establish a multi-level unified power market is “regional interregional national”, and gradually accumulate new energy trading experience. As the new energy storage technology still needs to be developed, and although China has accumulated more experience in medium and long-term trading, it has insufficient experience in power spot inter regional trading, and the short-term balance means of power system has not been fully mature. Therefore, we believe that in the short term, China’s power market reform may still focus on the expansion of interregional market and the accumulation of power spot trading experience. The overall planning among regions is mainly based on the transaction links between regions rich in new energy and regions rich in thermal power resources, so as to improve the proportion of new energy power generation and coordinate the realization of thermal power peak shaving function. ③ The national power trading center is still far from landing. Based on the above path, China’s landing of the national power trading center in the short term is neither basic nor necessary. As the power trading hubs of the State Grid and the South grid, the two trading centers in Beijing and Guangzhou will still undertake the cross regional trading tasks in their respective regions in the short term. Combined with the objectives of the opinions, the implementation of the national power trading center may be around 2025, and the functions of Beijing and Guangzhou power trading centers will be partially replaced around 2030.
3) key task 2: improve the function of the unified power market system
The opinions put forward four main tasks, namely, continuously promoting the construction of medium and long-term power market, actively and steadily promoting the construction of power spot market, continuously improving the power auxiliary service market and cultivating market players with diversified competition. Among them, ① in the part of medium and long-term market construction, the opinions proposed to “improve the market-oriented adjustment mechanism of medium and long-term contracts, shorten the transaction cycle, improve the transaction frequency and enrich the transaction varieties”; ② In the part of spot market, it is proposed to “organize and implement the pilot of power spot market and support the uninterrupted operation of qualified pilot”. ③ In the main part of the market, it is proposed to “promote the full participation of operating users in the market in batches”, “promote the transformation of priority power generation and priority power purchase plans into medium and long-term contracts authorized by the government” and “guide social capital to participate in power sales in an orderly manner”.
We believe that: ① with the adjustment of energy structure, the varieties of medium and long-term market transactions will continue to be abundant.
As power needs to ensure real-time supply and demand balance, and new energy power generation is uncertain. Therefore, with the increasing proportion of new energy power generation, the medium and long-term transaction varieties in the power market will continue to be rich, the transaction frequency will continue to increase, and the market liquidity is expected to improve. ② To adapt to new energy trading, the pilot scope of power spot market is still expected to be expanded, and the introduction of auxiliary tools is expected to be accelerated. As before, in the process of increasing the proportion of new energy, the necessity of realizing the short-term balance between power supply and demand through the power spot market continues to increase. We believe that the pilot scale of power spot is expected to continue to expand in the future, and accelerate the implementation of the inter provincial power spot trading rules (Trial) issued in January 2021 to further promote inter regional trading. At the same time, the importance of peak shaving in the spot market is gradually increasing, and the introduction of various new auxiliary services is expected to accelerate, promote the stability of internal peak shaving of new energy, and strengthen the foundation of energy structure transformation under the “double carbon” goal.
4) key task 3: optimize trading and market mechanism
The opinions put forward two main tasks, including improving the trading mechanism of the unified power market system and building a market mechanism suitable for the new power system. Among them, ① in the part of transaction mechanism, the opinions emphasizes the need to “ensure the relative stability of electricity prices for residents, agriculture, public welfare undertakings and other public utilities”; ② In the part of market mechanism, the opinions emphasize the need to “explore and carry out green power trading”, “improve the adaptability of the power market to a high proportion of new energy”, “guide new energy to sign medium and long-term contracts with a long period of time”, “encourage new energy to quote and participate in the spot market, and the electricity that fails to win the bid will not be included in the assessment of abandoned wind and electricity” “Improve the market-oriented trading mechanism of distributed generation”. We believe that: ① industrial and commercial electricity prices may face regional rebalancing. The expression of the transaction mechanism on the electricity price of residents, agriculture and public welfare undertakings shows that the construction of China’s power market will mainly affect industrial and commercial users on the consumer side in the future. The possibility of adjusting the price formation mechanism of residential electricity and agricultural electricity is relatively limited, and the electricity price cross subsidy mechanism may continue. With the marketization of electricity price and the unification of electricity market, the difference of electricity price among provinces is expected to narrow, and the industrial and commercial electricity price among regions may be rebalanced. ② With the optimization of the market environment, the development environment of all kinds of new energy will be more stable. The opinions promoted the medium and long-term trading of new energy, green power trading and market-oriented trading of distributed generation, and determined that the electricity that failed to win the bid in the spot market would not be included in the assessment of wind and light abandonment, so as to further optimize the development environment of all kinds of new energy.
5) investment opportunities: the pressure of thermal power is reduced, the development of new energy is accelerated, and the auxiliary market has good prospects
① in terms of thermal power, affected by the sharp rise of coal price in 2021, thermal power units have suffered a large loss, and there is a shortage of power supply in some areas. By reforming and improving the market-oriented formation of thermal power price and unifying and standardizing the price rules of local power market, the power supply and demand is expected to be further optimized and balanced, and the coal cost will be orderly transmitted to the downstream. Reduce the pressure of power generation and peak shaving of thermal power units. ② In terms of new energy, the construction of the national unified power market will help to improve the penetration rate of new energy power generation. At the same time, under the market-oriented trading mode, the return rate of new energy investment is expected to increase and the development pace is expected to accelerate. Among them, distributed photovoltaic and decentralized wind power have more flexible development speed or advantages due to the rate of return on investment. ③ In terms of auxiliary market, due to the existence of cross regional transaction barriers in power system, the demand for various consulting services has increased in the process of regional unified rules; At the same time, the more market-oriented trading and consumption mechanism increases the demand of enterprises for the regulation of power generation and power generation structure, and the power auxiliary service market has a good development prospect.
6) risk tips:
1. The epidemic rebounded beyond expectations, the demand for epidemic prevention limited the commencement of construction, the power consumption of industry and Commerce contracted sharply, and the construction of power market slowed down due to insufficient demand.
2. The downward pressure on the economy has increased, and all localities have affected industrial and commercial electricity prices or electricity supply through policies out of the goal of stable growth, so it is difficult to eliminate the barriers to cross regional electricity transactions.
3. Monetary policy tightened more than expected and the capital market adjusted.
