context: The two major priorities influencing PRC energy policy are energy security and decarbonisation. They are often in tension, but setting up a unified national power market system will create synergies between the two, both enhancing consumption of renewable power and ensuring that supply and demand are optimised on a larger scale.
By 2025, the preliminary stage of building a unified national power market will be complete, and by 2030, the market system will be 'basically built', according to 'Guiding opinions on accelerating the building of a unified national power market system', issued 28 January by the National Development and Reform Commission and National Energy Administration.
The opinions are important in three major ways, says Zeng Ming 曾鸣 Northern China Electric Power University Energy and Internet Research Centre director
- providing a huge boost to achieving carbon peaking and neutrality objectives
- enhancing economic efficiency, having positive impacts on both overall efficiency and power users
- promoting the scaling up of efficient production, transmission and consumption of new energy
Setting up a national market system will result in clean energy being scaled up even further, argues Zeng, including both centralised (e.g. west to east transmission models) and distributed models.
Creating a national unified market system and setting up market-oriented pricing systems are crucial for the clean energy transition, agrees Sun Chuanwang 孙传旺 Xiamen University China Energy and Economics Research Centre professor. It will
- coordinate the consumption of new energy on a greater scale
- promote further new energy development
- pressure coal power plants to shut down
- facilitate market-oriented price formation of coal power
- plug the supply-demand gap for coal power
The national market system will be set up by linking regional power markets with key UHV lines, says Sun.
One insider comments that this task is not as simple as just building one unified market. It is about creating a 'market system' by coordinating different markets (e.g. spot, ancillary services, long-term contracts) at different tiers (e.g. provincial, regional, cross-provincial).
Sun argues that a unified national power market system would help with
- refining market-oriented pricing mechanisms for coal power
- improving mechanisms to pass on power prices
- balancing electricity supply and demand
- plugging supply shortfalls of coal power