This week’s topic
On November 22, 2021, the State Grid Corporation of China officially issued the rules for inter provincial power spot trading (for Trial Implementation), and organized qualified market entities to carry out a two-day pre day and intra provincial power spot trading trial settlement from January 12 to 14, 2022. This week, we combed the development process of China’s power spot market and interpreted the trading rules and construction significance of the power spot market.
Core view
There are rich achievements in spot trading of surplus renewable energy power across regions and provinces
In August 2017, Beijing Electric Power Trading Center issued the pilot rules for cross regional inter provincial rich renewable energy power spot market (Trial), which established the prototype of inter provincial power spot market system. The cross regional renewable energy power spot trading market has achieved rich results in the past four years: ① effectively alleviate the high wind and light abandonment rate: the cumulative reduction of wind, light and water abandonment exceeds 25 billion kwh. ② Promote the consumption of renewable energy in Northwest China and support the power supply of receiving provinces: the four northwest provinces have consumed 17.6twh of new energy, which is equivalent to saving 5.39 million tons of standard coal and 14.95 million tons of carbon dioxide emissions. ③ From the perspective of transaction price, the daily transaction price can better reflect the market supply and demand situation; The annual average transaction price of the sending end basically fluctuates within 120 ~ 165 yuan / megawatt hour. The continuous rise of the average transaction price is consistent with the rising trend of the medium and long-term transaction price of electric power.
The inter provincial power spot trading rules were issued to promote the large-scale market-oriented trading of renewable energy. In November 2021, the State Grid Corporation of China issued the inter provincial power spot trading rules (Trial), which is the first inter provincial power spot trading rules covering all provinces and all power types in China.
The similarities and differences between trading mechanism and cross regional spot trading: ① similarities: including day ahead trading and intra day trading, in which day ahead trading takes 15 minutes as a node, with a total of 96 nodes throughout the day; Continue to adopt the clearing method of centralized bidding, and the specific process includes two-way quotation, centralized matching and marginal clearing. ② Differences: the transaction scope of inter provincial spot transactions and the main body of the buyer are expanded. At the same time, the transaction sequence is advanced, the frequency is increased, and the transaction mechanism is more perfect.
Promote the optimal allocation of resources on a large scale and promote the construction of a new power system with new energy as the main body: ① expand the scope of transactions, which is conducive to improving the power supply guarantee capacity of the whole network and mutual assistance of resources. ② The spot market trading mechanism can effectively promote the consumption of renewable energy. ③ The inter provincial power spot market is not only conducive to the expansion of the scale of green power transactions, but also will improve the income of green power from participating in market-oriented transactions through two channels: the increase of marginal clearing price and the increase of new energy consumption demand, which is expected to further open the space for the simultaneous rise of green power prices.
Help build a full space, full cycle and full variety power market structure: with the release and implementation of inter provincial power spot trading rules, a complete inter provincial power market system including medium, long-term and spot has been basically established, and the market framework of “unified market and two-level operation” has initially taken shape. The inter provincial market is positioned in the resource allocation market, and the intra provincial market is positioned in the balanced market, with a certain transaction sequence.
Investment advice
Multiple policies have guided the construction of China’s power trading market, and cross regional inter provincial surplus renewable energy power spot trading has laid a solid foundation for the construction of inter provincial power spot trading. The establishment of inter provincial power spot trading market will help to promote the optimal allocation of resources in a wide range, improve the guarantee capacity of power supply and promote the consumption of clean energy through the market mechanism. In terms of specific targets, the proposal of thermal power transformation to new energy targets focuses on [ Huaneng Power International Inc(600011) (a + H)] [China Resources Power] [ Huadian Power International Corporation Limited(600027) (a + H)]. New energy operators suggest paying attention to [Longyuan Power] [ Nyocor Co.Ltd(600821) ] [ Jilin Electric Power Co.Ltd(000875) ] [ China Three Gorges Renewables (Group) Co.Ltd(600905) ] [ Fujian Funeng Co.Ltd(600483) ]; Suggestions on promoting distributed photovoltaic standard in the whole county, focusing on [ Jinko Power Technology Co.Ltd(601778) ] [Shuifa Xingye energy], etc.
Risk tips: the policy promotion is less than expected, the power demand is less than expected, the risk of price reduction, the risk of coal price fluctuation, etc.
