Government outdoor power price standards

Why is China accelerating the market-oriented reform of its renewable power pricing system?

BEIJING, Feb. 10 -- China is accelerating the market-oriented reform of its renewable power pricing system in a bid to build a new power system and promote the sustainable development of renewable energy generation.

How will China's new energy pricing policy affect the future?

"This new pricing policy will significantly accelerate the construction of a modern power system and ensure the sustainable development of renewable energy," said Zhang Dayong, deputy secretary-general of the China Association for the Promotion of Industrial Development.

Is market-based pricing ripe for power generation reform?

Conditions are now ripe to shift to market-based pricing, analysts said, citing falling power generation costs and an evolving market and predicting that the reform will enhance industry efficiency and ensure sustainable high-quality growth.

What costs should be included in a power supply plan?

These costs should include purchases on (i) the equipment for supplying power at need (e.g., diesel gensets or solar panels); (ii) the equipment for smoothing the delivery of power (e.g., batteries or capacitors); (iii) costs of maintaining or fueling such equipment; and (iv) electricity substitutes (e.g., candles).

What is the economics of the power sector?

The economics of the power sector result from the physical properties of the system. Power systems exhibit both economies of scale and density5, implying that the system is a natural monopoly in the transmission and distribution subsectors. Other functions6 of the power market may be left to competitive forces.

How does a power sector regulation work?

Through its rules, the regulator ensures that the benefits of power sector infrastructure assets are sustainably and cost-effectively passed on to consumers, ideally, by setting tariff rates equal to a cost-reflective level for the utility given expected system expansions and below heterogeneous end users’ willingness to pay.