Power Market Reform Driven by New Energy (AI Translation)

【周刊提前读】深度：新能源倒逼的电力市场改革已至临界点

The article by Zhao Xuan and Fan Ruohong discusses the challenges and advancements in China's power system reform, specifically focusing on the integration of new energy sources such as wind and solar power. The rapid development of these renewable energy sources has created a complex situation of energy surplus and scarcity due to the intermittent nature of new energy supply, which fluctuates with weather conditions [para. 2]. The article highlights the need for a power market to manage these fluctuations effectively [para. 1].

China’s total installed power generation capacity has surpassed 3 billion kilowatts, with renewable energy accounting for more than half of this capacity. Industry experts predict that the country's 1.2 billion kilowatts target for wind and solar installations, originally set for 2030, will be reached as early as 2024 [para. 5]. This rapid increase is causing significant stress on the power system, necessitating reforms to enhance the efficiency of power markets and resource allocation [para. 7].

The long-term goals of "carbon peaking by 2030 and carbon neutrality by 2060" guide these reforms. The core characteristics of the new power system include being clean and low-carbon, safe, economically efficient, and flexible [para. 7]. Expert opinion emphasizes that achieving a balance between security, cleanliness, and affordability in energy is complex due to these conflicting objectives [para. 4].

The latest round of power system reform began with the issuance of Document No. 9 in 2015, which aimed to deregulate price settings and encourage private capital in electricity distribution and retailing [para. 15]. The reform framework focuses on "regulating the middle and liberalizing both ends" to foster competitive electricity markets [para. 13]. The reforms allow for real-time electricity pricing through spot markets, mid- to long-term markets, and ancillary service markets [para. 40].

Several regions, particularly Gansu Province, have been pioneers in these reforms. Gansu has established a continuous and stable spot market for electricity, which has been in operation for over three years. With a high proportion of new energy sources in its total installed capacity, Gansu serves as a critical example of how market mechanisms can be used to mitigate energy curtailment and boost new energy consumption [para. 67].

Despite significant progress, challenges remain. New energy companies are concerned about declining revenues as market entry leads to lower electricity prices [para. 57]. Moreover, the cost of system adjustments required to integrate unpredictable renewable energy sources complicates the financial landscape. Industrial energy users in Gansu, for example, benefit from lower electricity costs due to market mechanisms, but these benefits need to be expanded to other regions and user bases [para. 84].

The article suggests that further engagement from users and the development of power sales companies are key to deepening market reforms [para. 95]. Power sales companies can help manage risks and tailor electricity packages for consumers, providing a buffer against market volatility [para. 101].

In conclusion, while the power market reforms in China have made significant strides in integrating renewable energy and improving system flexibility, ongoing challenges such as cost management, market participation, and policy alignment still need to be addressed to fully realize the potential of a new-type power system [para. 40][para. 47]. Future reforms will need to balance local realities with overarching national goals, ensuring that market mechanisms are adequately developed to support both new energy producers and consumers [para. 85].