"Support" may be the key word for the energy and power industry this year

"Only if they survive can we survive," an electricity worker lamented recently.

According to statistics from the China Electricity Council, in the secondary industry, the proportion of electricity consumption in manufacturing and the four high-energy-consuming industries decreased by 4.3 percentage points in 2019, but they are still the main force in electricity consumption. The contribution rate of electricity consumption in the tertiary industry to the growth of electricity consumption in the whole society increased by 10.1 percentage points over the previous year, and it is the main driving force supporting the growth of electricity consumption in the whole society.

Electricity and users are like the intertwined double-stranded structure of DNA - the healthy development of the power industry can provide strong energy support for economic development, thereby promoting development; conversely, only the sustained development of the economy can drive the power industry forward.

The COVID-19 epidemic will have an impact on both the "stock" and "increment" of electricity consumption, at least in the short term. Analysts pointed out that during the Spring Festival, cities were closed and gatherings were prohibited, and the electricity consumption of the tertiary industries such as entertainment, catering, retail, and tourism declined significantly; the fluctuation of the industrial chain will also affect the manufacturing industry through demand, and the resumption of work of enterprises after the holiday has been delayed, which has put pressure on the growth of electricity consumption in the secondary industry; at the same time, the World Health Organization (WHO) declared this epidemic a "public health emergency of international concern" (PHEIC), which has brought certain negative impacts on import and export trade and national investment. However, on February 18, the WHO stated that there is no data showing that the new coronavirus continues to spread locally outside of China.

Many industry insiders believe that in 2020, except for some areas in the southwest that may show a tight balance due to accelerated industrial transfer, the overall supply and demand of electricity will tend to be loose.

"Support" may be the keyword for the energy and power industry this year.

No infrastructure project should be left behind

At the end of 2019, the industry had extensive discussions on the investment strategies of power companies in 2020. After the outbreak of the epidemic, the impact on short-term strategies was more significant.

On February 3, the Standing Committee of the Political Bureau of the CPC Central Committee held a meeting to listen to the reports of the Central Leading Group for Response to the Novel Coronavirus Pneumonia Epidemic and relevant departments on the epidemic situation and to study the next steps in epidemic prevention and control. The meeting pointed out that it is necessary to closely monitor the economic operation, focus on the impact and influence of the epidemic on economic operation, and focus on doing a good job in the "six stability" work. On the premise of doing a good job in epidemic prevention, we must fully support and organize the promotion of the resumption of work and production of various production enterprises, increase the start-up of new investment projects, and actively promote projects under construction.

Recently, Yu Yongding, a member of the Academic Division of the Chinese Academy of Social Sciences, pointed out in an interview with the media that when the growth rate of consumption and export demand is difficult to increase further and the government does not want to stimulate real estate investment through credit expansion, the role of infrastructure investment in driving growth is difficult to replace.

In supporting epidemic prevention and control and the power supply service guarantee measures for enterprises to resume work and production, China Southern Power Grid Co., Ltd. stated that it will adhere to the unchanged goals and tasks and further clarify its thinking. It will serve the implementation of various major strategies of the Party and the country, implement the "six stability" work deployment, maintain a reasonable investment scale, highlight precise investment, and give priority to investing resources in key tasks related to winning the decisive battle to build a well-off society in an all-round way and the decisive battle against poverty.

On February 16, more than 40 people from the ±800 kV Kunbei Converter Station B Project Team constructed by Guizhou Power Transmission and Transformation attended the start-up station meeting, marking the official start of the resumption of work and production of the Kunliulong ±800 kV UHV DC transmission project.

The first four of the 12 measures proposed by State Grid Corporation of China are related to infrastructure investment, including accelerating the construction of power grid projects to ensure people's livelihood, actively promoting the construction of key projects under construction, increasing the start of new investment projects, and promoting the preliminary work of a number of key projects. At a work meeting held on January 10, State Grid had just set its 2020 power grid investment plan at 408 billion yuan, and it was expected at the time that this investment would fall by 8.8% year-on-year.

On February 18, Mao Weiming, chairman and party secretary of State Grid Corporation of China, announced the start of construction of Shanxi Yanqu Pumped Storage Power Station project, marking the full launch of the project construction. In November 2019, State Grid issued a document to strictly control grid investment, which clearly stated that no new pumped storage projects would be started.

The day before the official announcement of the start of construction in various regions, another batch of dam sections, including the No. 2 and No. 14 dam sections of the main project of the Wudongde Dam under construction by the Three Gorges Group, were successfully poured to the top. According to the plan, the Wudongde Dam will be poured to the top in May 2020, and the first batch of units will be put into operation in July 2020.

According to eo, relevant power companies had received requirements from national ministries and commissions long before the date recommended by various provinces and regions to resume work and production, requiring them to rapidly increase infrastructure investment to boost economic recovery after the epidemic is over.

Song Feng, associate professor and doctoral supervisor at the School of Applied Economics of Renmin University of China, pointed out that in recent years, among the "three major drivers" of investment, consumption and exports, the proportion of investment has been getting lower and lower, while the proportion of consumption has been getting higher and higher. Increasing investment in the short term will play a certain positive role in driving growth, but the effect is not expected to be as significant as during the SARS epidemic 17 years ago.

"Against the backdrop of multiple reforms, investment in the energy industry is subject to more and more detailed constraints. The return of infrastructure is more about hedging short-term pressure, and the impact on the long-term development direction is limited."

On January 19, 2020, the National Development and Reform Commission officially issued the "Provincial Power Grid Transmission and Distribution Price Pricing Method" and the "Regional Power Grid Transmission Price Pricing Method", and released them on the official website on the eve of resumption of work in many places.

Wu Junhong, director of the Smart Energy Office of East China Electric Power Design Institute of China Electric Power Engineering Consulting Group, recently wrote that the supervision of power grid enterprises is not the most stringent, but only stricter. Whether in terms of cost verification ceiling, revenue accounting, investment decision-making, investment effect assessment, etc., reasonable constraints and monitoring systems have been strengthened.

For example, in terms of investment results, the project investment must be evaluated after completion. First, the historical unit electricity fixed assets will affect the approval of the estimated new transmission and distribution fixed assets. Second, after being determined by the relevant competent authorities, the cost and expense expenditures related to the transmission and distribution assets that have not been put into actual use, have not achieved the planning goals, or have arbitrarily increased the construction standards during the supervision period, except for policy factors, shall not be included in the pricing cost of the transmission and distribution price.

Emergency electricity price policies issued in many places

On February 7, the National Development and Reform Commission issued the "Notice on Adopting a Supportive Two-Part Electricity Price Policy to Reduce Enterprise Electricity Costs during the Epidemic Prevention and Control Period" (Development and Reform Office Price [2020] No. 110), pointing out that for enterprises affected by the epidemic, the change period of the two-part electricity price billing method may be relaxed, or relevant fees may be reduced or exempted, to meet the electricity demand of newly built and expanded medical and epidemic prevention facilities, and reduce operating costs. It also mentioned that relevant power grid companies are requested to refine and implement relevant electricity price policies, actively publicize and inform users, and do a good job in accepting user applications and handling exemptions.

Judging from the notice, the extent and method of electricity price support leave a certain amount of room for local discretion. According to the current method, some regions use fiscal revenue to pay, while others have power grid companies absorb and share the burden.