Measures will increase competition, efficiency: experts
A slew of new guidelines for power sector reform were published Monday by the National Development and Reform Commission (NDRC), the country's top economic planner, and the National Energy Administration (NEA).
The reform measures cover sectors including power transmission, distribution, trading mechanisms, and power generation planning.
Liang Changxin, an official with the NEA's legal and institutional reform department, said reform in the power sector aims to build a competitive market, allow more competitive procedures in power generation and sales, and prioritize the generation and sales of power from clean energy sources.
Lin Boqiang, director of the Center for Energy Economics Research at Xiamen University, said reforms can now be pushed forward according to these detailed guidelines.
"Now is a better time to push for efficiency-oriented reforms than in the last overhaul in 2002, when reform measures were compromised by the urgent need to resolve power shortages," Lin told the Global Times Monday.
Power generators and grid network operators have long had disputes over prices, and dominance of the grid network by two State-owned firms has increased this tension, according to experts.
"These guidelines will introduce more competition, help improve the sector's efficiency, and optimize China's energy structure," Han Xiaoping, chief analyst at energy website china5e.com, told the Global Times on Monday.
On November 20, the NDRC said it plans to scrap 21 regulations that have hampered competition or allowed monopolistic practices in the power distribution sector, as these regulations are no longer suited to the country's socioeconomic development needs.
One of the guideline documents published Monday said that the government will expand a pilot scheme currently being operated in Shenzhen in South China's Guangdong Province and in Northwest China's Inner Mongolia Autonomous Region, to include East China's Anhui Province, Central China's Hubei Province, Northwest China's Ningxia Hui Autonomous Region, and Southwest China's Yunnan and Guizhou provinces.
Under the pilot program, local governments will have more control over electricity transmission and distribution prices, and will set transmission and distribution costs based on "cost plus a reasonable margin."
"Geological differences mean that pilot programs in different localities are important. Yunnan Province, for example, has good hydropower and new-energy sources, while Inner Mongolia is a coal-based power exporter," Han said, noting that these pilot programs will help the nation find a better approach for reform in the power sector.
The private sector could gain a larger market share in some areas of the power sector as the reform pushes forward, Lin said.
The guidelines published Monday said that in order to improve services and introduce more competition, more independent power selling firms will be set up.
There are currently over 100 independent power selling firms across China registered with the nation's industrial and commerce administration offices, the China Business Journal reported on Saturday.
But experts said these firms may struggle to compete with existing players that are backed by grid network operators.
The new reform guidelines also emphasized the importance of electricity generated from new-energy sources, which has seen rapid growth in recent years.
However, experts said reform in the power sector will take a long time, due to its complexity.
"It will take time to see how these guidelines can be implemented and realized at the operational level," Lin said.
