What makes reform imperative is that the contradiction between power generation and power transmission and consumption is becoming more and more prominent. Visual China / Figure
On the first day of April 2024, Ruan Zhijun asked in an energy industry exchange group with nearly 500 people: How will the grid no longer purchase renewable energy?
Ruan Zhijun, deputy general manager of Zhejiang Xiaoneng Electricity Sales Co., Ltd., will have the opportunity to buy green electricity directly from power generation companies under the new regulatory measures.
On the same day, the National Development and Reform Commission (NDRC) issued the "Regulatory Measures for the Full Guaranteed Purchase of Renewable Energy Electricity", which was officially implemented, and the on-grid electricity of renewable energy was divided into guaranteed purchase electricity and market trading electricity.
Electricity generated from renewable energy sources such as solar and wind power is called "green electricity". This document will replace the currently being implemented Measures for the Supervision of the Full Purchase of Renewable Energy by Power Grid Enterprises, which was issued by the former State Electricity Regulatory Commission in 2007 and has been implemented for 17 years.
According to the previous method, except for large and medium-sized hydroelectric power generation, renewable energy generating units do not participate in online bidding, and are fully purchased by the power grid. The new approach means that the power grid will be purchased together, and part of the electricity will be traded in the market to form a market price.
The New Deal has caused widespread discussion in the industry. As soon as Ruan Zhijun's question was raised, peers in power generation and electricity sales from all over the country expressed their opinions in the group, speculating on the impact of the new deal on their own business.
There are also people who have already moved. After the new regulations were implemented, an investor in a photovoltaic power plant in Zhejiang approached Ruan Zhijun to sign a contract with his company to sell electricity. "Ask us to stamp him and prove that we can buy his electricity. If there is no such thing, the local power grid company will not provide access. ”
Lin Boqiang, director of the China Energy Policy Research Institute at Xiamen University, told Southern Weekend that the full purchase of the power grid, which began in 2007, was mainly aimed at encouraging the development of green power, which at that time accounted for a relatively low proportion of the overall power mix. However, with the significant increase in production capacity in recent years, there is greater pressure on the power grid to purchase the full amount.
According to data from the National Energy Administration, as of the end of December 2023, the country's total installed renewable power generation capacity reached 1.516 billion kilowatts, accounting for 51.9% of the country's total installed power generation capacity, historically surpassing thermal power. The country's renewable energy generation capacity is nearly 3 trillion kilowatt hours, close to one-third of the electricity consumption of the whole society.
In this context, the pace of marketization of green electricity is accelerating. In January 2022, the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) jointly issued a document proposing that a unified national electricity market should be basically built by 2030, and new energy sources should fully participate in market transactions. This time, it has become a key step to break the unified purchase and sales of the power grid.
"Investors are panicking"
"Investors in photovoltaic power plants are more panicked. Ruan Zhijun told Southern Weekend that renewable energy power stations were directly affected by the new policy, and photovoltaic power plants, which are developing rapidly, bore the brunt. Many friends who have invested in photovoltaic power plants have come to consult him about the situation.
In 2019, the National Development and Reform Commission (NDRC) required that the feed-in tariff for new centralized photovoltaic power stations be determined through market competition in principle, which means that the new policy will mainly affect distributed photovoltaic power stations. Such power stations are generally small in scale, mostly invested by private enterprises, and have developed rapidly in recent years.
According to data released by the National Energy Administration, in 2023, the new grid-connected capacity of photovoltaic power stations will be 216.3 million kilowatts, of which distributed photovoltaic will account for about 45%, and the new installed capacity of distributed photovoltaic will be 1.8 times that of 2022.
Ruan Zhijun said that in the past, the unified purchase of green electricity by the power grid was calculated according to the benchmark electricity price of thermal power, and investors also calculated the profit model accordingly, and the future income was relatively controllable. Entering the market means that electricity prices are volatile and investment uncertainty increases. A friend of his, who had planned to invest in a photovoltaic power plant in Yunnan, paused the plan after the new policy was introduced.
"It's really bad for investors. In the past, for example, the feed-in tariff in Guangdong was 4 cents and 5 cents, and I calculated the investment in the entire life cycle of the power station according to this price, how long it will take to pay back and how much money it can make, and now I can calculate it. After this policy (implementation), it will not be able to come out. Gu Lin gave an example to the Southern Weekend reporter.
He is the general manager of the power plant investment department of a renewable energy company in Zhejiang, which has invested in several photovoltaic power plants in Guangdong. He judged that after the new policy, not only will the income be difficult to predict, but in areas with large power generation, the price of green electricity may be reduced after entering the market-based transaction.
In 2017, Gu Lin invested in the construction of 79 photovoltaic power stations in Henan, costing more than 4 million yuan. At that time, it was estimated that the cost would be recovered in about four years, and the return on investment would be more than 20%. However, with the construction of a large number of photovoltaic power plants in Henan, the local government will start to restrict photovoltaic power generation in 2023, and sometimes Gu Lin's power station will limit power for two hours a day.
"There are too many of them, and there is a blowout of photovoltaics. Gu Lin estimates that after entering the market-based transaction, the price of green electricity in Henan may be lower, and the return on investment of power stations will also decline.
According to data released by the Henan Provincial Energy Planning and Construction Bureau, from January to October 2023, the province added 11 million kilowatts of rooftop PV, ranking first in the country.
The new regulatory measures do not specify the proportion of guaranteed purchased and market-traded green electricity.
Zhang Chuanming, chairman of Kyushu Energy Co., Ltd., told Southern Weekend that the specific proportion may be determined by local governments based on power generation capacity and consumption capacity.
Zhang Chuanming has worked in China Southern Power Grid for many years and has been working in the power industry for nearly 30 years. In his view, provinces with low supply of green electricity may have a higher proportion of guaranteed purchases, and electricity prices will not be greatly affected by the new policy, while provinces with oversupply may lower the proportion of guaranteed purchases, and electricity prices may decline after marketization.
Taking the southwestern provinces as an example, Zhang Chuanming said that the local renewable energy power stations have a large installed capacity, and the market electricity price can be as low as a fraction of a unit during the peak power generation period, but under the protection of the full purchase of the power grid, it is still connected to the grid according to the benchmark electricity price of thermal power.
"There is a strong urge from local governments to lower electricity prices. Zhang Chuanming believes that local governments have always hoped to form a depression in electricity prices, attract enterprise investment, and boost GDP growth, so they are more likely to increase the proportion of green electricity market transactions and reduce electricity prices through competition.
Gu Lin believes that this will also force renewable energy power generation companies to reduce costs, and may squeeze out some companies, especially those with weak technology and insufficient funds, "not to survive this winter".
As of the end of December 2023, the country's total installed renewable power generation capacity has historically surpassed that of thermal power. Visual China / Figure
"It's a technical problem, not an economic problem"
What makes reform imperative is that in recent years, the rapid increase in renewable energy power stations has made the contradiction between power generation and power transmission and consumption more and more prominent.
Nowhere is this more evident than in the Northwest. Due to the good natural conditions such as sunshine and water sources, and the low cost of land, the installed capacity of renewable energy power generation in Northwest China has increased rapidly. Taking Gansu as an example, Gansu Daily reported in January 2024 that the installed capacity of new energy accounts for 61.27% of the province's installed power supply capacity, ranking second in the country.
However, due to the level of local industrial and commercial development, the power absorption capacity is limited, and a large amount of green electricity needs to be delivered. The construction speed of the power grid is far less than the installation speed of new energy, and the electricity generated cannot be transmitted and digested, and the phenomenon of "nest electricity" is obvious. Wind and solar power can only be abandoned to limit power generation.
Tan Ruiwu was responsible for the operation and management of power plants in a listed photovoltaic company in China. He recalled to Southern Weekend that around 2016, the company had invested in the construction of centralized photovoltaic power plants in Gansu and other places, and power rationing occurred frequently, and photovoltaic power stations with an installed capacity of 10 megawatts were often limited to 5 megawatts of power generation.
Compared with coal burning, solar and wind power generation is dependent on the weather, which will increase the burden on the power grid and affect the stability.
With the construction of a number of ultra-high voltage transmission lines, the problem of green power transmission in Northwest China has been improved. In particular, the "Qingyu DC", which was completed and put into operation at the end of 2020, is the first UHV line in the country to transmit all green electricity, passing through Qinghai, Gansu, Shaanxi and Henan provinces.
But the phenomenon of "nest electricity" still exists. Caixin reported that Qingyu DC has a designed annual power transmission capacity of 40 billion kWh, but due to technical factors, the actual power transmission capacity for the whole year of 2023 is less than a quarter of the design capacity.
"It (the grid) can't buy that much, it's a technical problem, not an economic problem. Zhang Chuanming said that in the context of a significant oversupply of green power in the northwest region, the generation of green electricity exceeds the transmission capacity of the power grid.
"You're an adult"
In areas where transmission is not a problem, market-based trading can help to absorb green electricity and rationalize the pricing mechanism.
Tan Ruiwu revealed that around 2015, the subsidy for photovoltaic power stations was high, and power generation companies would even pay a few cents to supply power to the grid, and they could still make money after getting national subsidies. With the removal of subsidies, this phenomenon gradually decreased.
However, due to the contradiction between supply and demand, the full purchase of green power by the power grid has actually been distorted in the actual implementation process.
At that time, the photovoltaic power station invested by Tan Ruiwu in Gansu wanted to be purchased by the power grid, and it had to sign a directional electricity contract with the large electricity consumers in the east, that is, it was necessary to determine that the electricity could be sold to the end user before the power station could be connected to the grid and settled at the unified purchase price.
At that time, the users were pulled by the power grid, and some enterprises in Gansu and Shandong reached cooperation, and power generation companies could choose from the cooperation list. "That is, the power grid 'Lalang matching'. Confirm the power generation side and the power consumption side, and minimize the risk of the power grid. ”
Tan Ruiwu said, "There is too much electricity now, and new energy is too fierce all of a sudden." It turns out that the electricity generated by new energy is purchased by the power grid, and the power grid is then sold. Now that so much electricity is generated, it is difficult for the grid to sell. ”
Zhang Chuanming said that whether it is a full acquisition or a market-oriented transaction, the power grid can only earn transmission and distribution fees, and its price is approved by the National Development and Reform Commission.
However, under the model of unified purchase and sales, it is difficult for electricity prices to fluctuate with the market. Even if the supply of green electricity exceeds demand, the grid will still have to buy it at a higher price and further pass it on to end users. When supply exceeds demand, it is difficult for power plants to obtain higher profits. The introduction of new regulatory measures may break this situation.
"Now it's like you're an adult and you need to work on your own. Participating in the market-based trade fair will adjust the electricity price according to different conditions, some provinces may be lower than the unified purchase price, and some provinces lacking electricity may be higher than the unified purchase price. Gu Lin concluded.
In the past, many power station investors did not worry about selling electricity and were confused about power trading. Ruan Zhijun sees the new policy as a good opportunity for electricity sales companies to be able to purchase power directly from power stations, increasing their purchase channels.
Zhang Chuanming also believes that this is good for electricity sales companies, which means that there are more abundant sources of electricity purchases.
Some power station investors are also optimistic about the market trend after the new deal. Tan Ruiwu personally invested 10 million yuan in more than 100 distributed photovoltaic power stations in Hainan in 2023, and the proportion of local renewable energy consumption is low.
(At the request of the interviewee, Tan Ruiwu and Gu Lin are pseudonyms in the article)
Southern Weekly reporter Wei Lincong
Editor-in-charge: Zhang Yue