China's energy regulators are planning to expand power trading to allow all industrial consumers to buy electricity directly from suppliers by 2018, according to a draft policy document published by financial magazine Caixin on Friday. The plan is part of reforms for the power sector aimed at driving down electricity costs for industrial and commercial consumers amid a cooling economy. Solar, wind and biomass power producers are also to be given preferential treatment in the opening of the retail electricity markets to help curb emissions from coal-fired plants.
China has already rolled out pilot power reform programmes in a number of provinces to allow generators and consumers to reach supply deals independently of the grid companies, which remain responsible for transmitting power. The National Energy Administration (NEA), China's energy regulator, is looking to set up unified rules to create a nation-wide power market, according to legal experts. Local regulations are currently inconsistent and have been drawn up primarily to ensure long-term power supplies to large consumers.
The policy paper - which has not been officially released - will remain in the consultation stage until April 5, with local authorities and state-owned power companies able to submit their opinions on the plan, Caixin reported. In the first stage of reforms, the National Energy Administration (NEA), which drafted the paper, plans to raise the amount of power delivered through bilaterally negotiated contracts to 30 percent of the total. In later stages, the figure will rise to 100 percent for industrial users in 2018 and for commercial users in 2020.
China launched its first two power trading exchanges in Beijing and Guangdong on March 1, run by the country's two government-owned power distribution firms, the China State Grid and the China Southern Power Grid. The two exchanges are expected to ramp up cross-regional trading and the use of clean power, the National Development and Reform Commission (NDRC) said in a statement at the time. The NEA has asked provinces that have been given the go-ahead to roll out reforms to draw up regulatory plans and trading rules to allow for both long-term contracts and spot-delivered power as soon as possible, according to the draft policy.
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