Very soon, power consumers based in the East China region will be able to sign green power forward contracts with power generation companies in other provinces within the same region. The new rules were included in the ‘Consultative Draft of the East China Region Inter-provincial Mid-long Term Power Trading Rules and Regulation’ released by the East China Energy Bureau at the beginning of May.
The document specifies that inter-provincial green electricity trading will also include green power consumption certificates. Market participants will be initially limited to utility-scale wind and solar projects. Compared to locally produced power, purchase price will include certain key cost components involved in inter-provincial power transmission and trading on top of the power price and other governmental surcharges and funds required by laws.
Inter-provincial power trading price structureThe yearly contract volume of inter-provincial power trading in the East China region amounted to 104.4 TWh in 2021. Qinshan nuclear plant (Zhejiang) and power exports from Anhui province accounted for over 90% of the total.
The East China region includes 6 provinces geographically comprising Shandong, Jiangsu, Anhui, Shanghai, Zhejiang, Fujian. However, since Shandong is usually considered to be included in the North China power grid, it is unclear whether the new amendment will cover the province in the future.
Source: Azure International
Assumptions:
- Annual provincial power consumption grows by 4% from 2021 to 2025.
- Average wind, solar and biomass utilization hours of 2020 are used for estimating new energy power generation in 2025.
- New energy power import includes inter-regional and inter-provincial purchases.
Source: BJX, provincial 14FYPs
