Key points and trends in supervision of investment performance of typical power grid projects

China Energy Storage Network: Since the 12th Five-Year Plan, China's power grid construction has experienced a period of rapid development, and its scale has leapt to the first place in the world. The national interconnection has been steadily advancing, the regional power grid has been continuously strengthened, the automation level has been gradually improved, and the power quality and power supply reliability have been further improved, meeting the demand for electricity for economic and social development. In 2018, the investment in the power grid was 537.3 billion yuan, which has exceeded the investment in power sources for the fifth consecutive year since 2014.

In 2013, the National Energy Administration conducted the supervision of investment effectiveness of typical power grid projects for the first time, and selected 10 power grid projects for investment effectiveness analysis. In 2014, 10 power grid projects were also selected for evaluation from four aspects: project cost analysis, operation analysis, electricity price cost analysis and social benefit analysis. In 2015, the National Energy Administration continued to organize and carry out the supervision of investment effectiveness of 8 typical power grid projects such as Jinsu DC. In 2017, the National Energy Administration continued to deepen the supervision of investment effectiveness of power grid projects, and adopted a "double random" method to select a total of 19 supervision projects, including 10 typical power grid projects and 9 "look back" key projects, and released supervision reports to the public, which were widely supervised. With the continuous development of the new round of reforms, the government agencies have become a trend of "light approval and heavy supervision", and supervision will only be strengthened in the next few years, not weakened.

Progress of supervision on investment effectiveness of typical power grid projects

From 2013 to 2017, the National Energy Administration conducted four rounds of supervision on the investment effectiveness of typical power grid projects, including annual supervision in 2013, 2014 and 2015, and once every two years since 2015. The main supervision work includes the implementation of the plan, the actual operation, the investment benefits, the resource utilization and the impact on the ecological environment. In 2017, on the basis of the first three rounds of supervision, a "look back" on key projects was added, and some typical power grid projects that had been supervised in previous years were selected to track the changes in their subsequent transmission power and transmission power indicators.

Each supervision work includes two stages. The first stage is the material submission stage (May to June of the supervision year), during which power grid companies prepare basic data, fill in the relevant information form of the supervision project according to the requirements of the National Energy Administration, compile a self-inspection report on the investment effectiveness of the power grid project, and report it to the Market Supervision Department of the National Energy Administration. The second stage is the data summary analysis and on-site verification stage (July to September of the supervision year), organizing personnel and experts from the National Energy Administration’s dispatched agencies, China Electric Power Planning and Design Institute, China Electricity Council and other units to conduct on-site verification of the supervision power grid projects. Power grid companies cooperate in preparing relevant materials for the on-site verification projects. After the completion of the two stages, the Market Supervision Department of the National Energy Administration will compile a typical power grid project investment effectiveness supervision report based on the work results, and publish it to the public after completion.

The names of projects supervised by the National Energy Administration from 2013 to 2017 are shown in the table. A total of 38 typical power grid projects were selected for four supervisions, including 16 inter-provincial interconnection projects, 7 power plant transmission projects, 6 projects to meet load needs, and 9 grid reinforcement projects.

Typical power grid project investment performance supervision results

The typical power grid project investment effectiveness supervision report verifies the supervision project from project planning, investment decision-making, project implementation, completion and commissioning, and evaluates the actual operation of the project after commissioning. The supervision results mainly focus on the following issues:

The first is the actual operation effect of the project. Since the supervision work began, the actual operation effect of the power grid project has always been the top priority, and the reasons for not meeting the design expectations have been analyzed. For example, the first supervision result in 2013 was whether the actual operation effect of the inter-provincial DC transmission project met the original design expectations.

The second is the project construction management problem. This includes the timing, content and management process of the preparation of the project feasibility study, approval and construction. This problem mainly focuses on the compliance of the project construction. This includes whether the timing and process of approval and construction are correct, whether the construction scale is consistent with the approval scale, etc. For example, the scale of the project was adjusted after the approval document was obtained in 2014, but it was not reported to the approval department in time. There were problems with the construction of the projects in 2015 and 2017 before approval.

The third reason is that the project investment effect did not reach the design. This includes the coordination between the power grid and power supply, load growth, and construction environment. For example, the 2014 and 2015 regulatory reports both proposed that the power grid and power supply should be planned and developed in a coordinated manner. In 2015, it was mentioned that the power demand at the receiving end of some projects was lower than expected, resulting in the project function not being fully utilized.

Fourth, grid cost management and recovery. All previous supervisions have mentioned the issue of grid operation costs. For example, in 2013, it was mentioned that scientific statistics of operation costs would lay a good foundation for the reasonable determination of electricity prices, which would not only ensure the enthusiasm of the sending end to connect to the grid, but also meet the requirements of investment recovery and repayment of principal and interest for grid projects. In 2014, it was mentioned that a reasonable electricity price adjustment mechanism would be established to ensure the recovery of project investment and the interests of all market entities. In 2015, it was mentioned that standardization of cost accounting and management methods would ensure the accurate determination of transmission and distribution prices. In 2017, it was mentioned that some projects generated unreasonable costs, which needed to be further standardized.

Analysis of key points in supervision of investment effectiveness of typical power grid projects

By comparing and analyzing the progress of supervision work on investment effectiveness of typical power grid projects in previous years, the data reported for supervision and the supervisory opinions, we can conclude that the key points of the National Energy Administration's supervision work on investment effectiveness of typical power grid projects are as follows.

First, the supervision work covers various power transmission and transformation projects, which corresponds to the investment and construction types of power grid projects, ensuring the continuity of tracking and analysis, and helping to classify and analyze problems in the planning, preparation, and implementation processes of different types of projects, which is conducive to classified policy implementation and improving the accuracy and pertinence of investment.

Second, it supports the new round of power transmission and distribution reform. The three regulatory opinions from 2014 to 2017 all involved the cost accounting mechanism of electricity prices, especially the regulatory report in 2016 mentioned adjusting the cost accounting method to adapt to the requirements of power transmission and distribution price reform. According to the requirements of power transmission and distribution price reform and following the principle of "allowable cost plus reasonable profit", the power transmission and distribution costs should be consolidated and approved by voltage level and project to meet the requirements of power transmission and distribution cost accounting.

The third is to focus on cross-sector coordinated development of the energy industry, especially coordinating and solving problems between power sources, power grids and other types of energy entities. For example, the regulatory reports in 2014 and 2015 emphasized that power grids and power sources should be planned and developed in a coordinated manner. The 2017 regulatory report mentioned the need to coordinate well with local governments and the oil and gas industry.

Analysis on the trend of supervision work on investment effectiveness of typical power grid projects

A comprehensive comparison of the four typical power grid project investment performance supervision work conducted from 2013 to 2017 shows that the National Energy Administration's industry supervision has the following trends:

First, more attention is paid to the actual role of power grid projects in implementing planning and feasibility studies. The 2017 regulatory work requirements listed the implementation of the plan as the first item of regulatory work, and clearly included planning documents, feasibility study reports and approvals, preliminary designs and approvals in the list of materials to be provided. The self-inspection report also puts forward requirements for the content of the implementation of the plan, which fully reflects the shift in the focus of regulatory work. It is expected that future regulatory work will continue this trend, reflecting that the energy regulatory authorities have a well-documented record of grid investment management.