Reform of China's electric power industry Challenges facing the government

Andrews‐Speed, Philip; Dow, Stephen

doi:10.1016/s0301-4215(00)00034-3

Cited by 57 publications

(6 citation statements)

References 19 publications

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“…First, as far as we know this is the first quantitative assessment of the cost and environmental impacts of electricity market reform in China. There is a rich literature covering the institutional and political economy challenges to electricity reform in China [1,[5][6][7][8][9][10][11][12][13], but much of it predates the current round of reforms and its emphasis on markets. Pollitt et al [14] examines the power reform in Guangdong and provides an overview of its policies, operations, and potential effects on power sector operation and investment, but this work is qualitative.Kahrl et al [2] find that the production cost savings from transitioning to least-cost dispatch in China's Guangxi Province would likely be small because larger coal generators with similar heat rates account for most non-hydro generation in the province.…”

Section: Economic and Co 2 Emission Impacts Of Electricity Market Tramentioning

confidence: 99%

“…However, this difference of around 150 yuan/MWharound 600 yuan per kW per year (yuan/kW-yr) -is higher than the fixed costs of a new coal generator. 5 As a result, even after making 400 yuan/kW-yr scarcity payments to all within-province thermal generators in the High SPP scenario, total generation costs fall ( Figure 2).…”

Section: Reduction In Energy Margins For Thermal Generatorsmentioning

confidence: 99%

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Economic and carbon emission impacts of electricity market transition in China: A case study of Guangdong Province

et al. 2019

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China's electricity system is the world's largest, in terms of installed generating capacity, and is also the world's largest single source of greenhouse gas emissions. In 2015, China embarked on reforms in its electricity sector that aim to introduce market mechanisms in wholesale pricing. This study provides a quantitative assessment of the economic and CO 2 emission impacts of transitioning to electricity markets in China, focusing on Guangdong Province. We find that market reforms deliver significant annual cost savings (21 to 63 billion yuan, 9%-27% reduction in total costs in a base case) to consumers in Guangdong, with smaller production cost savings (12 billion yuan, 13% reduction in production costs in a base case). Savings for consumers are accompanied by a large reduction in net revenues for coal and natural gas generators, raising concerns about generator solvency, longer-term resource adequacy, and the need for transition mechanisms. Market reforms increase CO 2 emissions in Guangdong, as a result of gas-to-coal switching, though higher hydropower imports from neighboring provinces could offset these emissions. CO 2 pricing has a limited impact on CO 2 emissions in the short run and has the potential to lead to significant wealth transfers. The most important benefit of market reforms will be in providing an economic framework for longer-term operations and investment.

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Section: Economic and Co 2 Emission Impacts Of Electricity Market Tramentioning

confidence: 99%

Section: Reduction In Energy Margins For Thermal Generatorsmentioning

confidence: 99%

Economic and carbon emission impacts of electricity market transition in China: A case study of Guangdong Province

et al. 2019

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“…Beginning in 1985, spurred by supply shortages that were slowing China's industrial growth, generation was opened to local government and private foreign investment, and independent power producers were allowed to sell their power to the grid at prices that provided competitive rates of return, leading to rapid growth of new capacity. In 1997, as part of thenpremier Zhu Rongji's government reorganization, the Ministry of Electric Power was transformed into the State Power Corporation (SPC) and put on a commercial footing, while its regulatory and financial functions were transferred to other ministries, including the Ministry of Finance and what is now called the National Development and Reform Commission (NDRC) [7][8][9][10].…”

Section: The Institutional Landscape Of China's Electricity Sectormentioning

confidence: 99%

“…Due in part to domestic manufacturing constraints, generating units less than 300 MW account for most of the generating units and actual generation in China. Figure 2 illustrates this point using the four provinces in the North China Power Grid (NCPG) 7 . In 2004, units less than 300 MW accounted for 53% of the NCPG's total installed capacity and generation, and 87% of the total number of generating units in its service area.…”

Section: Increasing the Average Efficiency Of Coal-fired Power Plantsmentioning

confidence: 99%

Electricity reform and sustainable development in China

Williams

Kahrl

2008

Environ. Res. Lett.

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Reducing the environmental impact of supplying electricity is a key to China's sustainable development, and a focus of both domestic and international concerns with greenhouse gas emissions. The environmental performance of the electricity sector is strongly affected by its institutional arrangements: regulatory frameworks, wholesale markets, pricing mechanisms, planning and coordination, and enforcement and incentive mechanisms. These arrangements are set to change as electricity reforms inaugurated in 2002, but sidetracked by several years of supply shortages, are being resumed. In this paper we examine the impact of electricity reform on environmental sustainability by analyzing case studies of four environmental initiatives in the electricity sector: retirement of inefficient generators, installation of pollution control equipment, renewable energy development, and efforts to promote energy efficiency. We find that implementation of these policies falls short of objectives for two main underlying reasons: conflicting priorities between central and provincial governments, and ineffective regulation. Sustainability will be best served not by redoubling short-term supply-oriented, market-based reforms, but by better aligning central and provincial government incentives, and by developing competent, independent regulation at the provincial level. China's central government and sub-national governments in industrialized countries can both contribute to the latter goal.

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“…The generation and retailing tariffs are currently set and fixed by government according to the principle of rate of return regulation. Independent transmission and distribution tariffs for the grids are still absent and so grid companies would get their profits from the gap between generation and retailing tariffs (World Bank, 1997;Andrews-Speed and Dow, 2000;Xu and Chen, 2006). As a consequence of these policies, electricity companies were so profitable that some of them could even invested in some social events such as China Football League (Wang, 2000), while coal industry suffered a severe loss for nearly 20 years.…”

Section: Introductionmentioning

confidence: 99%

An imbalanced development of coal and electricity industries in China

Wang

2007

Energy Policy

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Reform of China's electric power industry Challenges facing the government

Cited by 57 publications

References 19 publications

Economic and carbon emission impacts of electricity market transition in China: A case study of Guangdong Province

Economic and carbon emission impacts of electricity market transition in China: A case study of Guangdong Province

Electricity reform and sustainable development in China

An imbalanced development of coal and electricity industries in China

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