What will the new electricity reform bring to the society?

During the two sessions of the National People's Congress, Wang Shumin, deputy director of the National Energy Administration, stated that the "Several Opinions on Further Deepening the Reform of the Electric Power System" will be issued soon.

The market decided on electricity prices, development of clean energy, and breaking of monopolies. Although the plan has not yet been introduced, these keywords have outlined the outline of this reform of the power system. At present, electricity is basically provided by state-owned enterprises. In the future, there will be private capital.

In view of a number of securities companies, this new power reform program will be an important part of the energy system reform, and the power and new energy sector will usher in a new round of thematic investment opportunities.

What can the first power system reform since 2002 bring to society?

Is reform necessary to reduce electricity prices?

According to Wang Yumin's statement, the power system reform focused on solving five problems: First, restoring the attributes of electric power products, forming a mechanism for the market to determine the price of electricity, and using price signals to guide the efficient development and rational use of resources. The second is to build a power market system to promote the optimization of power resources in a wider range. The third is to support the development of clean energy and promote the optimization of energy structure. The fourth is to gradually break the monopoly, orderly release competitive businesses, mobilize social investment, especially the enthusiasm of private capital, and promote the diversification of market players. The fifth is to change the government's functions, further simplify the administration, and strengthen power planning.

For many insiders, the core of these five issues is still the reform of electricity prices.

“In the past, the power grid dominated the world and the integration of transmission, distribution and sales meant that some of the existing structures were broken.” Xiao Hongjiang, chairman of the Hubei Provincial Committee of the Chinese People's Political Consultative Conference, said in an interview with the media that the actual role of the reform How big can it be, but also have to look at the specific operating rules.

On New Year's Day this year, Shenzhen’s electric power reform has been initiated, and Inner Mongolia has also become the second experimental field for the reform of transmission and distribution prices in the country. Next, Yunnan Power Grid may also be shortlisted.

“Document No. 5 of 2002 put forward that we must bid for the Internet and release the net products.” Zhu Yongji, former member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC) and former general manager of Guodian Corporation, said that everyone’s understanding of the bidding price is often the price reduction, and the parties’ voices Very high.

On February 10, 2002, the State Council published the “Power System Reform Plan” in the form of a No. 5 document. According to this plan, the State Power Corporation was split into seven power giants, “Two Networks and Five Companies.”

However, surprisingly, from 2002 to 2012, there were three large-scale power shortages across the country, which occurred in 2004, 2008, and 2011 respectively.

In this regard, the main point in the industry is that the price of the power industry has not been marketized, resulting in the asymmetry between coal prices, on-grid tariffs, and sales price.

Electricity prices have become a major problem that cannot be bypassed in the reform of the power system. In the past 13 years, the demands for bidding for the Internet and the market to determine prices have continued. One view is that reforms need to introduce competition to bring electricity prices down.

“It should be recognized that the power industry can still do work to reduce costs and improve efficiency, reduce energy consumption, and ultimately reduce electricity prices.” Zhu Yongzheng said, but is it necessary to reform the price? The price of the Internet is not the price of electricity will eventually lead to a drop in electricity prices. This is not necessarily the case.

In Zhu Yongxuan's view, the electric power industry must also ensure safety, stability, and reliability. This is an important indicator of the electric power service society, not just the issue of electricity prices. Without electricity, the lives of ordinary people will be affected. The power industry’s most concerned and most stressful is 24 hours of uninterrupted power supply.

Zhu Yongzheng said that some provinces require full-scale, full-scale power deregulation and electricity competition. "I have different opinions on this point."

“We have some power plants that are old power plants, some of which are used as voltage supports to support the grid. Some power plants are heating power plants. There are also remote power plants. If there is full power bidding, they basically have no way to live.” Zhu Yongzhen said: The main function of a heating power plant is to provide heat. It needs to balance losses through power generation, and the more electricity it generates, the better. The single capacity of the urban power grid is very small. As a power plant for peaking and frequency modulation, what should we do? Therefore, in the past reform, there were two electricity prices, one was the capacity electricity price, and one kilowatt was used to guarantee a basic ration, and then a part of the bidding was offered.

　 In this power system reform, the requirement for tariff adjustment is "gradual implementation."

“But now, some provinces are the first to fully release their electricity, and then they will drop three-fifths (electricity price).” Zhu Yongzheng said, this has become a local government to lower electricity prices, but it does not take into account the interests of central enterprises. This is a Central and local games have gone. Especially in power plants in the western provinces, industries with high energy consumption do not have much capacity to withstand electricity prices. It is understandable that they can lower their prices. But what about the loss of the power industry?

Does the high debt ratio limit investment?

Statistics show that the electricity supply situation in the country has been relatively loose since 2014, and the average annual utilization hours of thermal power generators in the country is only 4,807, which is the lowest record in the past 20 years.

This means that the overall power supply is oversupply, and some companies are concerned that the promotion of market-oriented reforms under this background will cause considerable pressure on power generation companies. Lu Qizhou, general manager of China National Power Investment Group, one of the five members of the National People's Political Consultative Conference and one of the five major power generation groups, said in an interview with the media that the total investment in CPI investment this year will drop by about 20% from last year.

Not only that, but the nation's electric power industry is also faced with a lot of trouble: the continuous high debt ratio. Statistics show that the asset-liability ratio of China's five major power generation groups exceeds 80%.

"For many years, electricity is a meager industry, because the country has limited electricity prices. Its actual investment rate of return is very low." Zhu Guo said that, for example, Guodian Group has assets of 800 billion yuan, net assets of more than 200 billion yuan, and lost 70 in 2008. Billion yuan, the power industry lost all industries. These years have been excavating potential, strengthening transformation and strengthening management.

Such a high debt ratio brings about the audit's dissatisfaction with the financial status of the power companies. In the SASAC's evaluation of power companies, the debt ratio is an important assessment indicator.

"I am not satisfied with watching such a high debt ratio. But what is the solution? The price of electricity is locked up and the price of coal is rising again." Zhu Yongzheng said: How is the high debt ratio caused? There are objective laws behind this. .

Zhu Yongzhe said that the power industry in the world is highly indebted, and the debt ratio of the power industry in the UK, Japan and other countries is 90%. This is a capital-intensive, investment-intensive, technology-intensive industry that requires high investment. If the scale of investment is controlled and no investment is made, there will be a vicious cycle.

At the two national conferences this year, Zhu Yongzheng called for the development of the electric power industry. “If we do not develop, our equipment industry will lag behind in the past two years. After our economic upgrading, we will have a serious shortage of electricity, which will cause great loss".

Development of new energy or transformation of thermal power technology

In the two sessions, the topic of environmental protection is very hot. In the background of a lot of smog, many people have taken this account to the power companies. From this year to the “Thirteenth Five-Year Plan” period, many of the hard targets for environmental protection have fallen on the power industry.

The government work report proposed that the emissions of sulfur dioxide and nitrogen oxides should be reduced by about 3% and 5% respectively this year. Deeply implement the air pollution prevention and control action plan, implement regional joint prevention and control, and promote ultra-low emission reform of coal-fired power plants.

Zhu Yongzheng especially wanted to establish a topic on this and conduct research on the sustainable development of the power industry. In his opinion, power development has played a crucial role in environmental protection and the development of the energy industry.

As we all know, nearly 50% of the nation's coal is used in the power industry. In recent years, the country has been vigorously developing new energy sources, such as wind power, solar energy, and hydropower, but the reality is that thermal power is still difficult to replace.

“Hydropower, wind power, and solar energy are all now becoming high-invested. Wind power costs 78,000 yuan per kilowatt, and solar power generates 8,000 yuan per kilowatt. Although the cost is falling, they are all higher than thermal power generators (generation). More than twice as much as thermal power, said Zhu Yongzheng.

So where is it difficult to develop new energy?

Zhu Yongxuan disclosed that wind power equipment manufacturing accounted for 40% to 50% of the total investment, that is, 40% to 50% of wind power's electricity price is equipment manufacturing (cost), and the proportion of solar energy is 50% to 60%.

Zhu Yongzheng said: Can we maintain the stability of the entire industry chain? This is something that the country should consider. The profits made by wind power and wind turbines have dropped sharply so that investors have no incentive to engage in new investments and projects.

In his view, to solve environmental problems, in addition to the development of new energy, it is necessary to carry out technological transformation of thermal power plants.

In the past few days, Zhu Yongzheng consulted with a technician: Now that the coal-fired power plants have to meet the emission standards of gas-fired power plants, are there any technical problems? The other party said there are no technical problems.

"After we have completed the reform, dust particulates have fallen by 55% to 60% compared with standards, carbon dioxide has dropped by 60% to 70%, and nitrogen oxides have dropped by 50%. The country has changed its power plant one year after another, and of course, the money spent. Too many, and gave a lot of subsidy policy.” Zhu Yongzheng believes that the country should see the potential, through the technical transformation of thermal power plants is promising. It is impossible to transform the thermal power plants into wind power, hydropower, nuclear power and solar energy. These new energy sources account for less than 10% of energy. The transformation of thermal power is imminent.

However, there are also problems in the technical transformation of thermal power. “This kind of environmental protection reform, stupid and stupid, tail flue, get a desulfurization tower plus a power plant, very simple, all kinds of SMEs are doing, how can not guarantee the quality, but the price is low, there is no strict technical specifications.” Zhu Yongzheng Say.