State Grid (SGCC) and China Southern Power Grid Corporation (CSG) recently announced the power purchase prices for 27 provinces and municipalities for March 2022. While the general upward trend of peak to valley gap prices across China has slowed, the gap increased in 11 provinces and cities compared to February. More than 19 provinces and cities now have price gaps superior to 0.7 CNY / kW. Shanghai, Sichuan, Guangxi, Tianjin, and Guangdong have the highest prices gaps, all superior to 1 CNY / kW.
(BJX)
Azure comment:
Since the issuance of the No.1439 policy (《关于进一步深化燃煤发电上网电价市场化改革的通知 (发改价格〔2021〕1439号》Further Deepening the Marketization Reform of Coal-fired Power On-grid Price) in Oct.2021, the historical electricity catalogue price of various provinces has been cancelled. All commercial and industrial buyers are required to buy power from the power market either directly or indirectly through the local power grid companies who act as “power brokers”, but without charging commissions explicitly so far. As a result, power tariff, one of the key cost elements for most of the commercial and industrial power users, is no longer anchored with the previously stable “catalogue price” set by the government. While the monthly electricity tariffs can fluctuate, the TOU ratio (peak/shoulder/valley ratio) remains regulated and continues to be used as a market incentive for peak-shaving. Since the issuance of NDRC’s Opinion on Promoting Green Development Pricing Mechanism through Innovation and Perfection No. (2018)943 国家发展改革委关于创新和完善促进绿色发展价格机制的意见发改价格规〔2018〕943号2018, NDRC has encouraged local governments and market players to provide peak regulation solutions through TOU price gaps, ancillary service compensation, and other market-based measures.
