[Energy people are watching, click on the upper right corner and add 'Follow'] Overall review of my country's electricity price policy and detailed explanation of the development history of various electricity prices. The special series of reports on electricity prices draw lesso

[Energy people are watching, click on the upper right corner to add 'Follow']

Overall review of my country's electricity price policy and detailed explanation of the development history of various electricity prices.

Special series of reports on electricity prices

Taking history as a mirror, we sort out the context of electricity prices

Electricity reform brings about three-link electricity prices: In 2002, the State Council issued the "Electricity System Reform Plan", which divided electricity prices into on-grid electricity prices, transmission electricity prices and distribution electricity prices, and terminal sales electricity prices. The on-grid electricity price is composed of the capacity electricity price set by the state and the electricity price generated by market bidding; the transmission and distribution prices are determined by the government on pricing principles; the sales electricity price is linked to the on-grid electricity price. Since then, a three-link electricity price structure has been formally formed, and the three are interrelated and influence each other.

benchmark on-grid electricity price, the anchor of the current electricity price system: As a product without inventory, electricity is produced in real time, consumed in real time, and dynamically balanced. In theory, its price may fluctuate extremely violently due to the lack of adjustment tools. Therefore, before an effective power market is established and power generation bidding is realized, it is necessary to control electricity prices, and electricity prices also exhibit strong policy control attributes. In 2004, the National Development and Reform Commission stipulated the benchmark on-grid electricity price for newly put into operation coal-fired units and some hydropower units within the unified dispatch scope of each region, which became one of the key indicators of the power industry.

Coal electricity Benchmark electricity price : There are more upward adjustments than downward adjustments, mainly depending on the trend of coal prices. Since the first approval in 2004, the national coal power benchmark on-grid electricity price has undergone 12 adjustments, including 7 increases, 4 decreases, and 1 increase and decrease. All 7 upward adjustments were related to the increase in coal prices, and 2 of the 4 downward adjustments were clearly due to the implementation of coal and electricity price linkage.

Benchmark electricity prices for water and electricity: from cancellation to return. The hydropower on-grid electricity price policy has undergone three adjustments: benchmarking, de-benchmarking, and returning to benchmarking. It currently presents three models, namely, independent electricity prices formulated in accordance with the "principal and interest payment price" or "operating period electricity price", and provincial implementation The benchmark electricity price, as well as the negotiated electricity price for inter-provincial and inter-regional power transmission. The inter-provincial and inter-regional power transmission price of some large-scale hydropower is determined based on the benchmark electricity price of coal-fired power in the province, the transmission price and line loss.

Nuclear power benchmark electricity price: Taking the coal power benchmark as a reference, more than half of the units are lower than coal power. The benchmark electricity price of nuclear power mainly refers to the coal power benchmark in the region. Under normal circumstances, newly put into operation units are not higher than the local coal power benchmark on-grid power price, which reflects the ability of nuclear power to replace coal power. Currently, among the nuclear power units in operation across the country, 24 units have grid-connected electricity prices lower than the local coal power benchmark electricity prices, 19 units are higher, and 2 units are at the same level.

Benchmark electricity prices for wind power and photovoltaic power: Accelerate the reduction and target parity. The benchmarking of wind power on-grid electricity prices began in 2009 and has been reduced three times; photovoltaic power generation began to implement benchmarking electricity prices in 2011 and has been reduced five times. Policy guidance promotes the acceleration of wind power and photovoltaic power towards the goal of affordable grid access without subsidies.

Gas and electricity benchmark electricity prices: independently formulated by local governments, with a single system and a two-part system coexisting. In 2014, the National Development and Reform Commission formulated corresponding on-grid tariff policies for three types of natural gas generating units. Since then, 12 provinces (autonomous regions and municipalities) across the country have successively formulated or adjusted local gas and electricity on-grid tariff policies. Among them, in addition to Shanghai and Zhejiang, which were the first to implement the two-part electricity price system of and , Jiangsu and Henan have also begun to implement the two-part electricity price system from 2019, and the remaining regions still use a single electricity price system.

Other power supply types: Benchmark electricity prices are implemented, and the non-subsidy part refers to the coal power benchmark. Biomass, waste incineration, and solar thermal power generation have all formulated national unified benchmark on-grid electricity prices. The real-time settlement part of the power grid and power generation enterprises is the local coal power benchmark electricity price, and the rest is subsidized by renewable energy.

. Three-link electricity price: Internet access, transmission and distribution, and sales

When researching the electric power industry and listed companies in the industry, electricity price is a recurring keyword.Whether it is a thermal power plant that burns coal, gas or garbage, or a hydropower station that intercepts and builds dams, or a nuclear power plant that controls a chain reaction, or even a wind power plant or a photovoltaic power station that relies on the weather, all power generation companies are combining different forms of power generation. After the energy is converted into electrical energy, it needs to be sold to its own customers (usually power grid companies or direct power supply users) to obtain income; and power grid companies also need to transport the received electrical energy to various downstream power users. In short, income = electricity × electricity price, so the study of electricity prices is indispensable.

1.1 Electricity reform brings three-link electricity price

Electricity is a kind of industrial product, but the difference from all other products is that electricity cannot be stored (before energy storage technology is widely promoted and applied), that is, electricity It is produced in real time, consumed in real time, and dynamically balanced. Therefore, there is no inventory of electricity. As a product without inventory, its price will theoretically fluctuate extremely sharply due to the lack of adjustment tools. Therefore, the control of electricity prices has become necessary, and electricity prices also exhibit strong policy control attributes.

The formation mechanism of domestic electricity prices has been adjusted many times with changes in electricity supply and demand and market structure. Since 1985, our country has successively implemented a number of electricity price policies such as "principal and interest payment electricity price", "fuel transportation price increase", "operating period electricity price", etc., which have played an important role in reversing the power shortage situation that existed in the early stage and supporting social and economic construction. positive effects. In the "Electricity Law of the People's Republic of China", which was reviewed and approved by the Standing Committee of the National People's Congress on December 28, 1995 and came into effect on April 1, 1996, Chapter 5 stipulates the following provisions on electricity prices: "Electricity prices, It refers to the on-grid electricity price of power production enterprises, the mutual power supply price between power grids, and the grid sales electricity price. "This has become the preliminary setting of the on-grid electricity price, transmission and distribution price , and sales electricity price.

From the perspective of the industrial chain, the power system can be divided into three parts: power generation, power grid, and users. The power grid can be divided into transmission network and distribution network, so there are three links, namely power generation → power transmission, power transmission → Distribution, power distribution → users. The three links correspond to four electricity prices, namely, on-grid electricity price, transmission electricity price, distribution electricity price, and sales electricity price. In the current integrated power supply pattern where transmission and distribution have not yet been separated, transmission electricity price and distribution electricity price can be regarded as a whole.

On February 10, 2002, the State Council issued the "Electric Power System Reform Plan" (Guofa [2002] No. 5), which was studied and proposed by the State Planning Commission in conjunction with relevant departments and units, as a supporting policy to implement the separation of factories and grids and implement competitive bidding for the Internet. , established a new electricity price formation mechanism, dividing electricity prices into on-grid electricity prices, transmission electricity prices, distribution electricity prices and terminal sales electricity prices. The on-grid electricity price is composed of the capacity price set by the state and the electricity price generated by market bidding; the transmission and distribution prices are determined by the government on pricing principles; the sales price is formed based on the above-mentioned electricity prices, and a mechanism linked to the on-grid electricity price is established. Since then, a three-link electricity price structure consisting of on-grid electricity price, transmission and distribution price, and sales electricity price has been formally formed.

1.2 The composition of the three-link electricity price

Following the electricity reform document No. 5, on July 3, 2003, the General Office of the State Council issued the "Electricity Price Reform Plan" (Guobanfa [2003] No. 62), which proposed the recent plans for the electricity price reform. and long-term goals. The long-term goal is to divide electricity prices into on-grid electricity prices, transmission prices, distribution prices and terminal sales electricity prices. Power generation and sales prices are formed by market competition, while transmission and distribution prices are set by the government. The short-term goal is to establish a system that is consistent with moderate competition in the power generation sector. Adapt the on-grid electricity price mechanism, initially establish a transmission and distribution price mechanism that is conducive to promoting the healthy development of the power grid, realize the linkage between the sales electricity price and the on-grid electricity price, optimize the sales electricity price structure, and pilot users with higher voltage levels or larger electricity consumption to directly pay the power generation Enterprises purchase electricity. The plan also proposes corresponding designs for the reform directions of electricity prices in the three links. The finalized "Implementation Measures for Electricity Price Reform" (Fagai Price [2005] No. 514) was officially issued by the National Development and Reform Commission on March 28, 2005. The measures include "Interim Measures for the Management of On-grid Electricity Prices" and "Interim Measures for the Management of Transmission and Distribution Prices" and the "Interim Measures for the Management of Sales Electricity Prices", which respectively provide detailed provisions for the three electricity prices:

On-grid electricity price

Definition: The price at which power generation companies and power purchasers conduct on-grid energy settlement.

Formation: Non-bidding: The on-grid electricity price of power generation enterprises shall be determined by the government price department based on the economic life cycle of the power generation project and in accordance with the principles of reasonable compensation of costs, reasonable determination of benefits and inclusion of taxes in accordance with the law. If the on-grid electricity price is determined through government bidding, the electricity price determined by the bidding shall be implemented. Bidding: The generating units participating in the competition mainly implement a two-part system for on-grid electricity prices. Capacity electricity prices are set by the government’s price department, while electricity prices are formed by market competition. Capacity electricity prices will gradually transition to be determined by market competition.

management: non-bidding: price authority of the State Council. Bidding: Capacity electricity prices are set by the pricing department of the State Council.

Transmission and distribution price

definition: The general term for the prices of access systems, networking, power transmission and sales services provided by power grid operating enterprises.

system: shared network power transmission and distribution service prices, special service prices (access price, special project power transmission price, interconnection price), and auxiliary service prices.

is formed: the transmission and distribution prices of the shared network are regularly assessed based on the grid assets corresponding to the transmission and distribution functions. The transmission prices of the shared networks in the regional power grid are unified according to the stamp law, and the provincial-level distribution prices are differentiated based on the provincial price. Voltage level setting. The connection price is set based on the allowable income of the connection system project approved by the government price department. A single capacity price is implemented and paid by the power plants connected to the system. The transmission price of special projects is set based on the permitted income approved by the government price department. A two-part transmission price is implemented and paid by the user of the project. The network price is based on the approved allowable income and is determined in two situations. For interconnection projects that do not have long-term electricity transactions, the interconnection price shall be based on a single capacity price, which shall be paid by both parties to the interconnection. For Internet-connected projects with long-term electricity transactions, the Internet-connected price implements a two-part electricity price. The Internet-connected capacity electricity price is paid by both parties to the network, and the Internet-connected electricity price is paid by the receiving grid. Prices for ancillary services will be determined separately.

management: Shared network power transmission and distribution prices, interconnection prices and special power transmission project transmission prices are set by the pricing department of the State Council; the access price for inter-provincial power grids is set by the price department of the State Council, and the price for access to intra-provincial power grids is set by the pricing department of the State Council. The price plan shall be proposed by the provincial price department and submitted to the price department of the State Council for approval. Distribution prices for independent power distribution enterprises are set by provincial price authorities.

Sales electricity price

definition: The price at which power grid operating enterprises sell electricity to end users.

consists of: power purchase cost, power transmission and distribution losses, power transmission and distribution prices and government funds.

system: electricity prices for residential electricity, agricultural production, industry and commerce and other electricity.

Formation: Residential and agricultural production use electricity, and a single unit of electricity price per unit of electricity is implemented. Among industrial, commercial and other users whose power receiving transformer capacity is 100 kVA or whose electrical equipment installation capacity is 100 kW or above, a two-part electricity price system will be implemented. If the capacity of the power-receiving transformer or the installation capacity of the electrical equipment is less than 100 kVA, a single-unit electricity price will be implemented. If the conditions are met, a two-part electricity price may also be implemented. The two-part electricity price consists of two parts: the electricity price per unit of electricity and the basic electricity price.

management: Before transmission and distribution are separated, the sales price of electricity is set by the price department of the State Council; after transmission and distribution are separated, the sales price of electricity is set by the price department of the provincial people's government, and those across provinces are reported to the price department of the State Council for approval.

It can be seen from the electricity price structure that the on-grid electricity price, transmission and distribution price and sales electricity price are interrelated and influence each other. For power generation companies, the on-grid electricity price is directly related to their operating income, so the on-grid electricity price is the focus of our research.

. Benchmark on-grid electricity price, the anchor of the current electricity price system

According to the requirements of electricity reform policies such as Document No. 5, the direction of on-grid electricity price reform is to fully introduce a competition mechanism. Prices are formed by competition between supply and demand parties. The ultimate goal is to establish power dispatch transactions. Center, implement power generation bidding for the Internet. The "Implementation Measures for Electricity Price Reform" in 2005 stated: "Before bidding for the grid, except for power generation enterprises that determine the grid price and new energy through government bidding, the grid price for newly built generating units in the same area will be the same price, and it will be announced to the public in advance. ; The on-grid electricity prices of power generation companies that have already been priced are gradually unified."The "same price" is the benchmark on-grid electricity price. The benchmark on-grid electricity price has been available in 2004.

On April 16, 2004, the National Development and Reform Commission issued the "Notice on Further Edging Electricity Price Contradictions and Standardizing Electricity Price Management" (Development and Reform Price [ 2004] No. 610), the notice requires the standardization of on-grid electricity price management. For similar units newly put into operation in the same area (classified by hydropower, thermal power, nuclear power, wind power, etc.), in principle, the on-grid electricity price shall be determined at the same price level; for units installed with desulfurization and environmental protection facilities For coal-fired power plants, their environmental protection investment and operating costs are included in the on-grid electricity price at the social average level. In June of that year, the National Development and Reform Commission issued the "Notice on Relevant Issues Concerning Easing the Electricity Price Conflict in the North China Power Grid" (Fagai Price [2004] No. 1036). "Notice on Alleviating Issues Concerning Electricity Price Conflicts in the Southern Power Grid" (Fagai Price [2004] No. 1037), "Notice on Alleviating Issues Related to Electricity Price Contradictions in Central China Power Grid" (Fagai Price [2004] No. 1038), "Notice on Alleviating Electricity Price Contradictions in East China" Notice on Issues Related to Electricity Price Conflicts in the Power Grid" (Fagai Price [2004] No. 1039), "Notice on Relevant Issues Concerning Alleviation of Electricity Price Contradictions in the Northeast Power Grid" (Fagai Price [2004] No. 1124), "Notice on Relevant Issues Concerning Alleviation of Electricity Price Contradictions in the Northwest Power Grid" (Fagai Price [2004] No. 1124) "Notice on Problems" (Fagai Price [2004] No. 1125) The electricity price adjustment notice of these six regional power grids stipulates that newly put into operation coal-fired units (including thermal power units), and some hydropower units within the unified dispatch scope of each province (autonomous region, city) Since then, the benchmark on-grid electricity price has officially become one of the key indicators of the power industry.

2.1 Coal power: more adjustments are made than downward adjustments, mainly depending on coal. Price trend

According to statistics, since the first approval in 2004, the national coal and electricity benchmark on-grid electricity price has experienced a total of 12 adjustments, including 7 increases, 4 decreases, and 1 increase or decrease in various regions across the country. The reasons for the adjustment were all related to the increase in coal prices, and 2 of the 4 downward adjustments were clearly due to the implementation of coal and electricity price linkage.

Compare previous adjustments to coal and electricity benchmark electricity prices and changes in thermal coal prices from 2004 to the present. , the two are highly correlated. After the price of thermal coal rises sharply and runs at a high level for a period of time, the on-grid electricity price will be raised. From September 2013 to December 2015, the price of electricity was lowered four times in a row, which was also due to the price of thermal coal. Since the end of 2011, it has entered a downward trend for nearly five years.

2.2 Hydropower: From Cancellation to Return

Before 2004, my country's hydropower stations had two methods: "principal and interest payment price" or "operating period electricity price". The formula is basically "one factory, one price". Since then, the electricity price policy for hydropower has undergone three adjustments: from benchmarking, to de-benchmarking, and then to benchmarking.

set

to be the same as coal power for the first time. In June 2004, the "Notice on Relevant Issues Concerning Easing the Electricity Price Contradictions of the Southern Power Grid" (Fagai Price [2004] No. 1037) and "On Relevant Issues Concerning Easing the Electricity Price Contradictions of the Central China Power Grid" were issued in June 2004. "Notice on Problems" (Fagai Price [2004] No. 1038) and "Notice on Issues Concerning Easing the Price Contradictions in the Northwest Power Grid" (Fagai Price [2004] No. 1125), for Hunan, Sichuan, Shaanxi, Gansu, Ningxia, The 10 regions of Qinghai, Guangxi, Yunnan, Guizhou, and Hainan have stipulated the benchmark on-grid electricity prices for newly put into operation hydropower units within the unified dispatch scope of the province.

Cancel

Due to the many differences in development costs, adjustment capabilities, value-added tax rates, etc. between different hydropower stations, a unified benchmark electricity price cannot meet the pricing requirements of different hydropower stations. Hydropower enterprises have suffered serious losses and insufficient funds for renovation and renovation. On November 18, 2009, the National Development and Reform Commission issued the "Notice on Adjusting Electricity Prices of Central China Power Grid" (Fagai Price [2009] No. 2925), "Notice on Adjusting Electricity Prices of Southern Power Grid" (Fagai Price [2009] No. 2926), "Notice on Adjusting the Electricity Price of the Northwest Power Grid" (Fagai Price [2009] No. 2921), the hydropower benchmark price for newly built hydropower stations is suspended.

Set for the second time

On January 11, 2014, the National Development and Reform Commission issued the "Notice on Improving the Formation Mechanism of Hydropower On-grid Prices" (Fagai Price [2014] No. 61). For hydropower stations newly put into operation after February 1, The on-grid electricity price is determined according to two types:

The inter-provincial and cross-regional transaction price is determined by negotiation between the supply and demand parties. The on-grid electricity price for inter-provincial and inter-regional power transmission from hydropower stations is determined based on the ground price in the receiving area minus the transmission price (including line loss). Among them, the inter-province (region, city) transmission price is approved by the National Development and Reform Commission; The regional power grid transmission price is reviewed by the National Energy Administration and reported to the National Development and Reform Commission for approval; the landing price in the power receiving area is determined by negotiation between the sending and receiving parties with reference to the average power purchase price of provincial power grid enterprises in the receiving area.

The provincial on-grid electricity price implements a benchmark electricity price system. The hydropower benchmark on-grid electricity price in each province (autonomous region and city) is based on the average power purchase price of provincial power grid enterprises in the province, and is formulated by taking into account the changing trends of supply and demand in the power market and the cost of hydropower development; provinces (autonomous regions and cities) with a large proportion of hydropower can be set in Based on the benchmark on-grid electricity price of hydropower, time-of-use electricity prices or classified benchmark electricity prices are implemented in peak and dry periods according to the role of hydropower stations in the power system.

Since then, hydropower has returned to the benchmark electricity price policy, and Hubei, Hunan, Sichuan and other regions have also successively introduced their own benchmark on-grid electricity prices for hydropower. At this point, the hydropower on-grid electricity prices have shown three models: independent electricity prices based on the "debt repayment electricity price" or "operating period electricity price", the benchmark electricity price implemented within the province, and the negotiated electricity price for inter-provincial and inter-regional power transmission.

On May 5, 2015, the National Development and Reform Commission issued the "Notice on Improving the Price Formation Mechanism for Inter-Provincial and Inter-regional Electric Energy Transactions (Fagai Price [2015] No. 962)", with Xiangjiaba , Xiluodu and Yalong River Taking the cascade hydropower station as an example, a cross-provincial and cross-regional power transmission price formation mechanism has been determined based on the benchmark on-grid electricity price and transmission price of the province where the coal-fired power generation was implemented, as well as the line loss inference to determine the on-grid electricity price.

2.3 Nuclear power: Taking the coal power benchmark as a reference, more than half of the units are lower than coal power

The benchmarking of nuclear power on-grid electricity prices came much later than coal power and hydropower. It was not until June 15, 2013 that the National Development and Reform Commission issued the "About Improving Nuclear Power Grid Power" Before the Notice on Issues Related to the Electricity Pricing Mechanism" (No. 1130, Development and Reform Commission [2013]), the pricing policy of "one factory, one price" was adopted, and the pricing decision-making power also rested with the National Development and Reform Commission. Document No. 1130 stipulates that the benchmark on-grid electricity price policy for newly built nuclear power units shall be implemented, and the national benchmark on-grid electricity price for nuclear power units shall be 0.43 yuan per kilowatt-hour. In areas where the benchmark on-grid electricity price for nuclear power units is higher than the benchmark on-grid electricity price for coal-fired units where the nuclear power units are located, the local coal-fired electricity price shall be implemented. Benchmark on-grid electricity price for the unit. In addition, the notice will be reserved for areas where the benchmark on-grid electricity price of nuclear power is lower than the benchmark on-grid electricity price of coal-fired units where the nuclear power units are located, as well as the first or first batch of nuclear power units or demonstration projects that are responsible for the introduction of nuclear power technology, independent innovation, and localization of major special equipment. leeway, stipulating that its on-grid electricity price can be appropriately increased based on the national nuclear power benchmark electricity price. On March 20, 2019, the National Development and Reform Commission issued the "Notice on the Trial On-grid Power Price for the First Batch of Third-Generation Nuclear Power Projects" (Fagai Price [2019] No. 535), which clearly supports the first batch of nuclear power units responsible for technology introduction and stipulates that third-generation nuclear power units will be introduced on a trial basis. The first batch of nuclear power projects, Sanmen, Haiyang, , and Taishan Phase I, have implemented trial feed-in electricity prices, and are required to arrange power generation plans in accordance with the principle of full power generation.

observes the guidelines for setting benchmark electricity prices for nuclear power, and it can be seen that they mainly refer to the benchmark electricity prices for coal power in the region. Under normal circumstances, the on-grid electricity price of newly put into operation units is not higher than the local coal power benchmark, which reflects the ability of nuclear power to replace coal power. Currently, among the 45 nuclear power units in operation across the country, the on-grid electricity price of 24 units is lower than the local coal power benchmark price (including desulfurization, denitrification, dust removal, and ultra-low emission power prices), and 19 units are higher than the coal power benchmark price, and another 2 units remain unchanged.

2.4 Wind power and photovoltaic power generation: accelerated reduction, target parity

Wind power and photovoltaic power generation, as representatives of renewable energy, have developed rapidly and have become the third and fourth largest installed power supply types in the country respectively, and the third largest proportion of power generation. ,fifth. After experiencing early experimental development, its on-grid electricity prices quickly completed benchmarking.In the on-grid electricity price structure of wind power and photovoltaic power, the benchmark electricity price of coal power also occupies an important position.

The "Trial Measures for the Management of Prices and Cost Sharing of Renewable Energy Power Generation" issued on January 20, 2006 (Fagai Price [2006] No. 7) stipulates that the price of renewable energy power generation shall be implemented in two forms: government pricing and government guidance price. The government-guided price is the bid-winning price determined through bidding; the on-grid electricity price of renewable energy power generation projects is higher than the benchmark on-grid electricity price of local desulfurization coal-fired units. The operation and maintenance costs of public renewable energy independent power systems invested or subsidized by the state are higher than those of local governments. The average sales price of electricity at the provincial power grid, as well as the grid connection fees for renewable energy power generation projects, etc., are settled by levying electricity price surcharges on power users. That is, part of the electricity price settled in real time by the power grid and power generation companies is the local coal and electricity benchmark price, and the rest needs to wait for the renewable energy subsidy to be issued.

2.4.1 Wind power: three reductions, cancellation of benchmarks, competitive configuration

The benchmarking of wind power on-grid tariffs began in 2009. On July 20 of that year, the National Development and Reform Commission issued the "Notice on Improving the Wind Power On-grid Pricing Policy" (Development and Reform Price [ 2009] No. 1906), according to the status of wind energy resources and engineering construction conditions, the country is divided into four types of wind energy resource areas: I-IV. The corresponding benchmark on-grid electricity prices are 0.51, 0.54, 0.58, and 0.61 yuan/kWh respectively. In addition, on June 5, 2014, the National Development and Reform Commission issued the "Notice on the On-grid Pricing Policy for Offshore Wind Power" (No. 1216 [2014]), setting benchmarks for offshore wind power that had not yet begun large-scale development at that time. electricity prices. The notice stipulates that the on-grid electricity price for offshore wind power projects put into operation before 2017 is 0.85 yuan/kWh, and the on-grid electricity price for intertidal wind power projects is 0.75 yuan/kWh.

After five years of implementation, the benchmark electricity price of wind power has been reduced for the first time. The "Notice on Appropriate Adjustments to the Benchmark On-grid Electricity Price of Onshore Wind Power" (Fagai Price [2014] No. 3008) published at the end of 2014 reduced Class I and Class II The benchmark on-grid electricity price for wind power in Class III resource areas will be reduced by 2 cents/kWh. One year later, the "Notice on Improving the Benchmark On-grid Electricity Price Policy for Onshore Wind Power and Photovoltaic Power Generation" (Fa Gai Price [2015] No. 3044) was announced, once again reducing the benchmark on-grid electricity price for wind power in Class I, II, and III resource areas by 2 cents/kW. hour, the Class IV resource area is reduced by 1 cent/kWh. The notice also set the benchmark electricity price for wind power starting in 2018 in advance, but a year later, the "Notice on Adjusting the Benchmark On-grid Electricity Price for Onshore Wind Power for Photovoltaic Power Generation" was issued on December 26, 2016 (Development Reform Price [2016 No. 2729), the benchmark wind power on-grid electricity price from 2018 has been significantly reduced. The electricity prices in the four resource areas of Type I-IV have been reduced by 7, 5, 5 and 3 cents/kWh respectively compared with 2016-2017.

On May 18, 2018, the National Energy Administration issued the "Notice on Relevant Requirements for Wind Power Construction Management in 2018" (Guoneng Fa Xinneng [2018] No. 47). The notice stated that from that day on, the 2018 wind power construction regulations have not yet been issued. New centralized onshore wind power projects in the planned provinces (autonomous regions and municipalities) and offshore wind power projects with undetermined investment entities should all be allocated and determined through competitive methods; starting from 2019, new approvals for new provinces (autonomous regions and municipalities) All centralized onshore wind power projects and offshore wind power projects should all be configured and determined through competitive methods; the declared electricity price should be a 20-year fixed on-grid electricity price calculated under reasonable income conditions.

2.4.2 Photovoltaic power generation: five cuts, subsidies are accelerating the decline

The formulation of the benchmark on-grid electricity price for photovoltaic power generation began with the "Notice on Improving the On-grid Price Policy for Solar Photovoltaic Power Generation" announced on July 24, 2011 (Fagai Price [2011 ]1594). The notice stipulates that a national unified benchmark on-grid electricity price will be implemented for non-tendering solar photovoltaic power generation projects; the on-grid electricity price for photovoltaic power generation approved for construction before July 1, 2011 and completed and put into operation on December 31, 2011 will be uniformly approved at 1.15 yuan/kWh; For photovoltaic power generation projects approved on or after July 1, 2011, and approved before July 1, 2011 but not yet put into operation on December 31, 2011, the on-grid electricity price is 1 yuan/kWh except for Tibet.

The first reduction of photovoltaic benchmark electricity prices came two years later. On August 26, 2013, the National Development and Reform Commission issued the "Notice on Using Price Leverage to Promote the Healthy Development of the Photovoltaic Industry" (Fagai Price [2013] No. 1638), dividing the country into In Class III solar resource areas, the benchmark on-grid electricity prices for photovoltaic power stations in Class I-III resource areas are respectively 0.90, 0.95, and 1.00 yuan/kWh, that is, the on-grid electricity prices in Class I-III resource areas are reduced by 10, 5, and 0 cents/kWh respectively. . The notice also clarified the subsidy policy for distributed photovoltaic power generation, with the subsidy standard being 0.42 yuan/kWh. At the end of 2015 and 2016, photovoltaic and wind power adjusted the benchmark electricity prices together, and the magnitude of the two price reductions also showed an expansion trend, respectively 10, 7, 2 cents/kWh and 15, 13, 13 cents/kWh. However, with the explosive growth of photovoltaic installed capacity, accelerated price reductions are unable to alleviate the increasingly heavy subsidy pressure, and policy adjustments have become more frequent. On December 19, 2017, the National Development and Reform Commission announced the "Notice on the Price Policy for Photovoltaic Power Generation Projects in 2018" (Fagai Price Regulations [2017] No. 2196). In addition to reducing the on-grid electricity prices of centralized and distributed photovoltaic power plants by 10 and 5 cents/kWh. It also stipulates that from 2019, the corresponding benchmark electricity price will be implemented based on the time of operation, and the on-grid electricity price will no longer be implemented based on the filing time. Immediately six months later, the "Notice on Matters Related to Photovoltaic Power Generation in 2018" (Fagai Energy [2018] No. 823) was announced. On the one hand, the “531” new policy halted the construction of centralized power stations, and on the other hand, it also reduced the on-grid electricity price of centralized and distributed photovoltaic power stations by 5 cents/kWh.

2.4.3 Soliciting opinions on the new policy, aiming to achieve affordable access to the Internet without subsidies

On January 7, 2019, the National Development and Reform Commission and the National Energy Administration jointly issued the "Notice on Actively Promoting Work on Affordable Access to the Internet without Subsidies for Wind Power and Photovoltaic Power Generation" (NDRC Energy [2019 ]19), the notice proposes to carry out the construction of affordable grid-connected projects and low-price grid-connected pilot projects, and promote the construction of wind power and photovoltaic power grid-affordable grid-connected pilot projects that do not require state subsidies and implement coal-fired benchmark grid-connected electricity prices (affordable grid-connected projects; in areas with excellent resource conditions On April 8, 2019, the National Energy Administration issued the "About Us" on April 8, 2019. "Work Plan for Promoting the Construction of Subsidy-free and Affordable Grid-connected Projects for Wind Power and Photovoltaic Power Generation (Draft for Comments)", and then issued the "Notice on Relevant Requirements for the Construction and Management of Wind Power and Photovoltaic Power Generation in 2019 (Draft for Comments)" on April 11. Accelerate progress towards the goal of affordable access to the Internet.

The draft for comments proposes that the competitive allocation method should strictly implement the principles of openness, fairness and justice, take the on-grid electricity price as an important competitive condition, and prioritize the construction of projects with low subsidy intensity and strong decline. The "Guidance Plan for Competitive Allocation of Wind Power Projects" stipulates:

Provincial energy authorities should calculate and determine the upper limit of competitive allocation of on-grid electricity prices that is lower than the benchmark on-grid electricity price for wind power in the region issued by the price department of the State Council;

In 2019, new centralized onshore wind power and All offshore wind power projects are configured through competition and the on-grid electricity price is determined. The on-grid electricity price declared by each project shall not be higher than the national benchmark on-grid electricity price for similar resource areas;

Offshore wind power projects that did not enter the scope of national subsidies through competition in 2018 and determine the on-grid electricity price , its approval documents cannot be used as the basis for enjoying state subsidies;

All new centralized onshore wind power and offshore wind power projects in 2019 will be allocated through competition and the on-grid electricity price will be determined. The on-grid electricity price declared by each project shall not be higher than the same resource area stipulated by the state. Benchmark on-grid electricity price.

"Photovoltaic Power Generation Construction Management Work Plan" stipulates:

Provincial energy authorities should formulate unified management methods for competitive allocation of resources in the region in accordance with national policy requirements, taking the expected on-grid electricity price as the main competitive condition;

National The Energy Bureau will select projects included in the subsidy scope in descending order based on the revised on-grid electricity price quotations of the declared subsidy projects;

Photovoltaic power generation projects included in the scope of national subsidies should be completed at full capacity before the end of the quarter in which the declared expected production time is located. For grid-connected projects that are not completed within the time limit, the grid-connected electricity price subsidy will be reduced by 0.01 yuan/kWh for each overdue quarter.

2.5 Gas power: independently formulated by local governments, single system and two-part system coexist

Natural gas power generation, as a type of thermal power, has been promoted and applied in many regions across the country due to its clean, environmentally friendly and rapid response characteristics. However, due to problems with gas sources and gas prices, currently only Beijing, Shanghai, Guangdong, Jiangsu, Zhejiang and other regions have large installed capacity, and most of them implement temporary feed-in electricity prices. In some areas, because electricity prices cannot cover the cost of gas prices, power generation results in losses, so a two-part electricity price policy has been adopted to ensure the profitability of peaking units; other areas still use a single electricity price system.

On December 31, 2014, the National Development and Reform Commission issued the "Notice on Issues Concerning Standardizing the Management of On-grid Prices for Natural Gas Power Generation" (Fagai Price [2014] No. 3009), which implements different on-grid tariff policies for three different types of natural gas generating units. Among them, the on-grid electricity price policy for newly put into operation natural gas combined heat and power generating units shall be based on the benchmark electricity price policy; the on-grid electricity price for newly put into operation natural gas peak-shaving generating units shall be determined based on the reference to the on-grid benchmark electricity price for natural gas combined heat and power generation, with due consideration to the reasonable difference in power generation costs between the two; For newly put into production natural gas distributed generating units that are surplus to the company's own use or directly traded and purchased by power grid enterprises, the on-grid electricity price shall in principle be based on the local on-grid electricity price for newly put into production natural gas cogeneration power generation. In addition, the notice stipulates that the maximum price of natural gas power generation shall not be higher than the local benchmark price of coal-fired power generation or the average power purchase price of local power grid enterprises by 0.35 yuan/kWh, and a provincial-level responsibility system shall be implemented for the price management of natural gas power generation.

Since then, 12 provinces (autonomous regions and municipalities) across the country have successively formulated or adjusted their own gas and electricity on-grid tariff policies. Among them, in addition to Shanghai (starting in 2012) and Zhejiang (starting in 2015), which were the first to implement the two-part electricity price system, Jiangsu and Henan will also implement the two-part electricity price starting in 2019.

2.6 Other power supply types: benchmark electricity prices are implemented, and the non-subsidized part refers to the coal power benchmark

2.6.1 biomass power generation

On July 18, 2010, the National Development and Reform Commission issued the "Notice on Improving the Price Policy for Agricultural and Forestry Biomass Power Generation" (NDRC Price [2010] No. 1579). The notice stipulates: Starting from July 1, 2010, a benchmark on-grid electricity price policy will be implemented for agricultural and forestry biomass power generation projects. New agricultural and forestry biomass power generation projects that do not use bidding to determine investors will uniformly implement a benchmark on-grid electricity price of 0.75 yuan per kilowatt hour; agriculture and forestry The part of the on-grid electricity price of biomass power generation that is within the benchmark on-grid electricity price of local desulfurization coal-fired units will be borne by the local provincial power grid enterprise, and the higher part will be settled through the additional apportionment of renewable energy electricity prices levied nationwide.

2.6.2 Waste incineration power generation

On March 28, 2012, the National Development and Reform Commission issued the "Notice on Improving the Price Policy for Waste Incineration Power Generation" (NDRC [2012] No. 801). The notice stipulates: Waste incineration power generation projects approved after January 1, 2006 will first be settled according to the amount of waste processed into the plant converted into grid-connected electricity. The grid-connected electricity converted per ton of domestic waste is tentatively set at 280 kilowatt-hours; the national unified waste-to-energy generation will be implemented. The benchmark electricity price is 0.65 yuan per kilowatt-hour, and the rest of the electricity on-grid will be subject to the local electricity price of similar coal-fired generating units; the portion of the electricity price for waste incineration power generation that is higher than the benchmark electricity price of local desulfurization coal-fired units will be apportioned at two levels, of which the local provincial power grid will bear 0.1 Yuan/kWh, and the rest will be included in the national renewable energy electricity price surcharge.

2.6.3 Solar thermal power generation

On August 29, 2016, the National Development and Reform Commission issued the "Notice on the Benchmark On-grid Price Policy for Solar Thermal Power Generation" (Fa Gai Price [2016] No. 1881), which will all be put into operation before December 31, 2018. For solar thermal power generation projects, the national benchmark grid-connected electricity price for solar thermal power generation (including heat storage function for more than 4 hours) is 1.15 yuan/kWh.

. Future Trends

The power system reform has established a three-link electricity price mechanism consisting of on-grid electricity price, transmission and distribution price and sales electricity price. The three are interrelated and influence each other. As a product without inventory, electricity is produced in real time, consumed in real time, and dynamically balanced. In theory, electricity prices will fluctuate extremely violently due to the lack of adjustment tools.Therefore, before an effective power market is established and power generation bidding is realized, it is necessary to control electricity prices, and electricity prices also exhibit strong policy control attributes.

By sorting out the historical and current electricity price policies, on the one hand, we can find the core position of the benchmark on-grid electricity price of coal power in the existing electricity price system, which affects the benchmarks, upper limits and unsubsidized electricity prices of other types of power sources in many aspects; On the other hand, it can be found that among various power source types, the on-grid electricity prices of hydropower and nuclear power are more competitive than coal power, and the competitiveness of wind power and photovoltaic power will gradually increase after the price parity is accelerated.

. Existing problems

1) Lower on-grid electricity prices

The policy of lowering sales electricity prices on the downstream user side may be transmitted to the upstream power generation side, resulting in lower on-grid electricity prices; with the advancement of electricity reform, the scale of market-based electricity transactions continues to expand, which may lower the average Feed-in tariff.

2) Decline in utilization hours

The power industry is one of the pillars of the national economy. Changes in the supply and demand relationship are largely affected by the macroeconomic operating status, which will directly affect the utilization hours of power generation equipment.

3) Coal prices are rising

The release of high-quality coal production capacity is lagging behind, and environmental protection production restrictions have further suppressed the production and supply of coal; the substantial increase in electricity demand has increased the bargaining power of coal manufacturers and suppliers, making it difficult to price thermal coal be effectively controlled; for thermal power enterprises that mainly rely on coal-fired power plants, rising fuel costs will reduce profits.

4) Policy advancement lags behind

Electricity supply and demand in some areas of the country are still in a state of oversupply, which may affect the power consumption of existing nuclear power units and the start of construction of new nuclear power units.

5) Reduced precipitation

The operating performance of hydropower mainly depends on the incoming water and consumption situation. The incoming water situation is related to natural factors such as precipitation and climate, and the predictability is not high.

(Source: Ping An Securities Author: Yan Jiayuan)

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