Electricity prices remain high. Where will electricity prices in Sichuan's power market go in the last week of April?

This article is the observation and conclusion of market insiders and does not represent the views of Xiangnenghui. Other readers are welcome to add Xiangnenghui AI WeChat (JingReport_AI) to put forward ideas and communicate together.

Sichuan's power market currently has eight market trading products: aluminum-electricity cooperation, cross-provincial linkage, strategic long-term agreement, conventional direct purchase, surplus electricity, underestimated water abandonment, retained electricity, and shutdown compensation. It should be the most complex electricity sales market in the country.

All the annual centralized bidding transactions in 2019 were completed on March 29. The Sichuan power market in 2019 can be said to be in full swing. The regular direct purchase price given by power sales companies to users was 0.25-0.26 yuan/kWh. In order to seize the market, some power sales companies, regardless of the user's peak and low structure curve, quoted a floor price of 0.2304 yuan/kWh. Before such a brutal market competition, the annual centralized transaction transaction rate of power sales companies was only 10.08%, and the price of strategic long-term contracts was also the ceiling price of 0.230 yuan/kWh.

1. Regular direct purchase transactions

The buyer demand, seller indicators and prices of the annual centralized transactions of regular direct power purchases on the platform have increased significantly, while the transaction volume and transaction proportion have dropped sharply, as shown in Table 2.1.

2. Strategic long-term transactions

In 2019, 12 listed parties and 224 delisted parties participated in the platform's strategic long-term annual centralized trading, and a total of four rounds were carried out. The listed party demand was 1,476,320 MWh, the delisted party's total volume was 366,683,044 MWh, and the cumulative transaction volume in four rounds was 344,071 MWh, accounting for 23.31% of the transaction, and the transaction time was concentrated at the beginning and end of the transaction. The transaction price was higher than expected. Taking BOE as an example, under the premise of the structure of 5:2:5, 159,996 MWh of electricity was traded at 230 yuan/MWh, while the unit price of 5:2:5 structure is expected to be 195 yuan/kWh by many power sales companies (when calculating, the strategic long-term contract 5:2:5 structure generally refers to this value), and the transaction price is 23.08% higher than expected.

3. Regular trading in April

In April 2019, two conventional direct purchase incremental transactions were carried out, and the transaction results were not optimistic. Due to the high electricity prices, the transaction volume of the two transactions was small and the transaction proportion was low. From the comparison of transactions in the two weeks of April, it can be seen that under the deviation assessment, the power sales company had to purchase at a high price. Most of the quotations of hydropower plants were 0.42 yuan/kWh, which was much higher than the on-grid electricity price and thermal power price of Sichuan hydropower (most of the on-grid electricity prices of Sichuan hydropower plants ranged from 0.288 yuan/kWh to 0.308 yuan/kWh; the on-grid electricity price of thermal power was 0.4012 yuan/kWh).

Figure 2.3 Regular direct purchase incremental transactions in April 2019 (first week)

Figure 2.4 Regular direct purchase incremental transactions in April 2019 (second week)

Why did the Sichuan market have such a bad situation this year? First, malicious competition among power sales companies has led to lower and lower electricity price demands on the user side. The ultimate goal of power reform is to restore the commodity attributes of electricity. At the beginning of the market, power users have used various tricks to make power sales companies provide high deposits, power plant power supply guarantee agreements and other methods to bid. It is also common for one user to compete with at least 5 power sales companies to compete. Thirdly, due to the prominent contradiction between flood and drought in Sichuan, 70% of power sales companies can only buy hydropower during the dry season, and most small power plants have a flood-dry ratio of 2:1; in addition, about 70% of the global Bitcoin mines are concentrated in my country (data source: CCTV survey in 2017), and most of these are concentrated in Sichuan hydropower stations. Bitcoin consumes 20 billion kWh of electricity in Sichuan throughout the year (the average price throughout the year is 0.30 yuan/kWh). Most small hydropower has little interest in other unplanned trading products except for the need to complete regular indicators this year. Large power plants do not only sell during the dry season, such as buying 1:1 electricity prices for flood and drought, which is much higher than that of small hydropower plants.

In the same hydropower province, Yunnan's average transaction price in March was only 0.22667 yuan/kWh, while Sichuan's hydropower price was nearly 2 times higher. At present, according to the "Guiding Opinions on Sichuan Power Trading in 2019", both the power generation and user sides are settled on a monthly basis. However, if the power generation company's dry season priority plan can be rolled over, the power generation side can not sell in April, but sell in December. Due to the deviation assessment, the power sales company has to buy at a high price.

What is the electricity price in Sichuan in the last week? Let's take a look at the electricity trading situation on Monday, April 22.