Experts suggest: Using the Internet to solve China's energy problems

China Energy Storage Network News: At the 2016 First China Energy Internet Summit held recently, Fan Bi, a special researcher at the China Center for International Economic Exchanges, pointed out that there is still a big gap between China's energy and the Internet era based on the characteristics of Internet development. He believes that it is necessary to deepen energy system reform in order to give full play to the role of energy Internet and solve China's outstanding energy problems.

The Internet is a typical general-purpose technology, with the characteristics of fast innovation, wide versatility and strong penetration. It can create unprecedented productivity when combined with any industry. However, Fan Bi admitted that although the Internet has changed the world, it has not changed China's energy. He elaborated on this point in six aspects:

The first is the mode of production. Since the fourth industrial revolution, driven by the Internet, advanced manufacturing has developed towards small-scale, distributed, and flexible production, and intelligent manufacturing and virtual manufacturing have emerged. However, in the energy field, such as electricity, oil and gas, traditional industrial production methods are still the main method. Due to the large one-time investment and high sunk costs of energy equipment, technology updates often take decades, and it may even take hundreds of years to achieve generational replacement. Although the Internet era has arrived, the situation of long-term adjustment in the energy field has not changed.

The second is the distribution method. The emergence of the Internet has blurred the boundaries between primary distribution and redistribution. The distribution content of the traditional distribution method is mainly money and welfare, while the distribution under the participation of the Internet also includes services, physical objects and various virtual rewards such as points, rebates, and certain rights, whose value can be equal to money. At present, the energy sector has not yet broken away from the framework of primary distribution and redistribution. In the primary distribution of electricity and oil and gas, since the prices and output are set by the administrative departments, the corporate profits are often difficult to reflect efficiency. In the process of redistribution, the state-owned capital budgets handed over by energy state-owned enterprises are not satisfactory, and most of these budgets are used for state-owned enterprises. Some energy state-owned enterprises also receive fiscal subsidies. Even from the perspective of traditional distribution, the energy sector has not fully achieved efficiency and fairness, let alone accepting various new distribution methods in the Internet era.

The third is the transaction method. Mobile Internet has brought about a payment revolution. However, in the energy sector, a few companies are the sole buyers and sellers, and the relevant departments determine the price and allocate the output. Even in the traditional transaction method, this is a model with a low degree of marketization and a relatively rigid model. Of course, you can buy electricity online, but the price is fixed. Consumers will not buy electricity at different prices due to different time, different consumption, and different power supply points. The transaction scale has not seen the blowout development of Internet finance and e-commerce.

Fourth, the consumption mode. The Internet consumption mode is characterized by personalization and customization, and the scope of consumer purchases breaks the spatial limitation. However, for energy consumers, energy supply is limited to a few power grid companies and oil and gas companies, and consumers do not have much choice.

Fifth, the economic system. The characteristics of the Internet world are full competition, non-public economy, and decentralized market entities. The characteristics of the energy sector are high supply-side industry concentration, unilateral purchases, franchise operations, and operators are mainly state-owned enterprises.

Sixth, the organizational form. The Internet world is a flat structure and horizontal network model. The energy sector is generally a hierarchical structure and a vertical chain model.

As for why the current energy Internet has not been fully developed? Fan Bi believes that, first, the high concentration of the energy industry has suppressed competition, resulting in the failure of the price mechanism and the imbalance between supply and demand; second, the ownership structure of the energy industry is single, mainly state-owned economy. Energy circulation mainly relies on state-owned trade, which requires franchise; third, there is a lot of administrative intervention. The management of energy enterprises by relevant departments is still mainly based on indicator control and administrative approval, while the supervision of network-based monopoly industries that need supervision is absent.

How to make the energy Internet find a way to "break through", Fan Bi believes that the key is to return energy to its general commodity attributes. Specifically, it is necessary to lower the entry threshold and allow market entities of various ownerships to engage in energy supply and circulation business; completely break the administrative monopoly and industry monopoly on energy trading and circulation, liberalize energy supply and marketing prices, and cancel the planned management of energy prices and output; for network-based monopoly industries in the energy field, implement the reform of separating network operation and liberalizing competitive businesses, and form a market pattern of more buying and more selling between energy supply and energy consumption.

Regarding the future of energy internet, Fan Bi believes that once energy internet is fully developed, energy can be used like other commodities to flexibly adjust energy supply and demand through price mechanism. This will play an important role in reducing energy costs, reducing extensive energy use, further solving the problems of wind, solar and water abandonment, and improving consumers' right to choose.