Large consumer direct electricity purchases are starting a new situation after years of debate and even after being halted. After the restructuring of the National Energy Administration, it specifically issued a document to promote direct electricity trading and strengthen follow-up supervision.
The so-called large-user direct purchase of electricity is the signing of the purchase and sale agreement between the user and the power plant. The Development and Reform Commission approves the transmission and distribution tariffs of the grid, and entrusts the transmission and distribution of electricity to the grid. Direct transaction is different from the integration mode of power grid transmission and distribution, and it is considered as an innovation of power reform.
According to the latest news, Guangdong Province has expanded the scale of direct-purchase electricity pilots, Sichuan Province has issued a delivery plan to join the pilot, and Shanxi, Henan, and Jiangxi are studying implementation plans. Prior to this, the trial of direct electricity purchase reform was once stalled. Only seven provinces including Liaoning, Jilin and Fujian have been piloted and the transaction scale is very limited.
In the State Council's cancellation and decentralization of administrative examination and approval, large-scale direct-purchase electricity pilot approvals are on the list. According to the reform plan, direct purchase of electricity by large users no longer needs to be reported to the National Energy Administration for approval. In the past, though direct purchase of electricity was market-oriented, it still needed to be submitted for approval.
A source from the Energy Bureau explained that “according to the post-reform approval process, local governments can formulate their direct-purchase electricity plans for large users and submit them to the National Energy Administration for filing. Within the scope of the National Development and Reform Commission’s responsibilities, it is no longer a buyer-seller transaction program. According to regulations, the grid transmission and distribution price must be calculated according to the calculation formula of the NDRC and submitted for approval according to the procedures.â€
At this stage, the central and western provinces of Shanxi, Henan and other provinces are more enthusiastic about the direct purchase of electricity by large users. One of the drivers is that direct electricity purchases can provide electricity customers with lower electricity prices.
Because of the suspicion of providing low electricity prices for high energy consumption, direct purchase of electricity has been controversial since the reform pilot. Opponents believe that direct purchase of electricity is a disguised low electricity price, which is inconsistent with energy-saving emission reduction and structural adjustment.
In order to avoid the above problems, the National Energy Administration requires the improvement of market access conditions for direct electricity trading. "Power users participating in direct transactions must comply with national industrial policies such as the "Guidance Catalogue for Industrial Structure Adjustment" and the environmental discharges are up to the standard. Enterprises that do not comply with the state's industrial policies and those that have eliminated products and processes may not participate."
In terms of sub-regions, the eastern region should be tilted toward high-tech companies, strategic emerging industries, and energy efficiency benchmarking companies. In the central region, enterprises that participate in direct electricity trading have lower energy consumption per unit than the average level of industrial enterprises in the province; in particular, the western region is rich in energy. In the region, enterprises that participate in direct electricity trading have lower energy consumption per unit than the national average.
The National Energy Administration issued a document stating that "any unit or department must not use administrative means to forcefully designate objects, electricity, and electricity prices for direct transactions, and may not implement preferential tariff policies in the name of direct transactions."
In addition to buyers and sellers, power grid companies are important participants in direct power purchase transactions. In this process, direct purchase of electricity needs to be coordinated with the operating mode of the grid to ensure the safety of the grid; secondly, a reasonable transmission and distribution tariff is verified to ensure the interests of the grid.
Disregarding the fact that the price of electricity can be lowered, another layer of intent of the reformers is that as the scale of direct purchase of electricity increases, the cost of transmission and distribution of the grid (loss rate) will continue to be clear, which will pave the way for subsequent reforms in power transmission and distribution and reform of electricity prices.
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