Promote the construction of a market system that adapts to the new power system

China Energy Storage Network News: On March 15, 2021, the Ninth Meeting of the Central Financial and Economic Commission clearly proposed to "build a new power system with new energy as the main body". On November 24 of the same year, the Central Committee for Comprehensively Deepening Reforms reviewed and approved the "Guiding Opinions on Accelerating the Construction of a National Unified Electricity Market System", which clarified the development direction, development goals and development paths in the energy and power fields.

To achieve the goals of carbon peak and carbon neutrality, it is necessary to continuously promote the construction of the power market and the innovation of systems and mechanisms, continuously improve the power market mechanism, operation mechanism, and price mechanism, give full play to the decisive role of the market in allocating resources, and accelerate the construction of a unified, open, competitive and orderly power market system that adapts to the rapid development of new energy. In the process of promoting the construction of a market system that adapts to the new power system, it is necessary to focus on three aspects, namely, giving full play to the role of power sales companies in the construction of the power market, building a new power market that adapts to new energy, and actively and steadily promoting the construction of the power spot market.

Give full play to the role of power sales companies in the construction of power market

One of the biggest features of "Document No. 9" is "control the middle and release the two ends", thus increasing the role of power sales companies and completely breaking the long-term monopoly of power grid companies in the power sales field. This method has indeed introduced competitive entities, but from the practice of the past few years, my country's power sales companies are currently facing two main problems.

First, the technical level is uneven and the ability to resist risks is poor. According to incomplete statistics, among the tens of thousands of power sales companies that have been established nationwide, 60% of them have not entered the market and have not conducted actual business. Some power sales companies entered the market impulsively, lacked professional personnel and technical capabilities, had poor risk resistance, and could not withstand the "slightest disturbance" in the market. Especially in 2021, affected by the continued high price of coal, the annual transaction price was "wholesale and retail inverted", and power sales companies suffered heavy losses. As of December 2021, 19 power sales companies in Jiangsu Province had been delisted.

Second, the business model of power sales companies is too single, and homogeneous competition is serious. At present, the main business of power sales companies is electricity sales, and their income comes from the price difference between electricity purchase and sale. The value-added electricity service is far from forming an effective business model, and even triggered vicious competition to obtain the market through price cuts. Taking Jiangsu Province as an example, except for a very small number of power sales companies such as Heilan Power that have made comprehensive layouts in the field of integrated energy services, other power sales companies basically stay at the level of power sales business, with serious homogeneous competition. From 2018 to 2021, the average contract price difference has decreased year by year.

To give full play to the role of power sales companies in the construction of the electricity market, we must focus on guiding power sales companies to transform into comprehensive energy service providers, and better play their positive role in avoiding market risks, improving market efficiency, guiding energy-saving services, and promoting the development of new energy.

First, help users avoid market risks. With the deepening of the construction of the power market, the types and frequencies of power transactions are increasing, which puts higher requirements on market participants. Due to the lack of professionalism, individual power users will face price fluctuations when directly participating in the wholesale market, and the accompanying profit and loss and market risks are huge. Power sales companies should take advantage of their professional advantages, conduct in-depth research on the corresponding market characteristics such as rules and supply and demand relationships, make good price forecasts, play a good role in risk control, effectively hedge the price volatility risks in the power market by acting as agents for multiple power users, and effectively control the user price level through a combination of spot, medium- and long-term contracts and financial derivatives.

The second is to guide users to improve their energy consumption. According to preliminary estimates, the number of market users will jump from less than 500,000 households to about 50 million households in 2022, an increase of more than 100 times, and the demand for personalized value-added services will increase greatly. On the one hand, power sales companies should use power management services to count users' historical load data, analyze power consumption levels, and formulate reasonable power consumption plans to meet the needs of large users such as industrial and commercial enterprises; on the other hand, they should subdivide customer group characteristics and consumption patterns based on the power consumption habits of medium-sized users and small family users, and provide users with seasonal, time-based, and customized electricity price packages to help users save electricity expenses. Guide users to use electricity in staggered periods, promote users to improve power consumption curves, achieve energy conservation and consumption reduction on the user side, and optimize resource allocation. The increase in user demand for personalized value-added services will bring broad opportunities to power sales companies. Guiding users to improve their energy consumption levels is the most important manifestation of power sales companies in competition in the next step.

The third is to promote market competition efficiency. On the retail market side, in order to gain more market share, power sales companies will actively optimize their own power sales business, proactively provide users with various power services, form competition in the power sales market, and ultimately improve the energy consumption experience of power users. On the wholesale market side, power sales companies will accelerate the convergence of transaction prices, forcing power generation companies to actively carry out energy efficiency transformation, bring more opportunities for high-efficiency units in the market, improve power generation efficiency and capacity utilization, and promote competition in the power generation market.

Fourth, promote the development of new energy. Since the output curve of new energy, especially wind power generation, is difficult to control, there are great risks for a single new energy power station to participate in the market, and the interests cannot be guaranteed, which is not conducive to the development of new energy. Through the power sales company, multiple new energy power stations can be aggregated to participate in the market, effectively smoothing the uncontrollability of a single output curve, and even through the power sales company to achieve "fire and wind" and "water and wind" matching, basically realize the controllable output of new energy, thereby avoiding market risks. Power sales companies gain benefits by managing risks, and more importantly, the interests of new energy are guaranteed, and there is a driving force for development, which can promote the construction of a new power system with new energy as the main body.

Fifth, promote comprehensive energy utilization starting from distributed photovoltaics. At present, distributed photovoltaics have become an important means to achieve the goals of carbon peak and carbon neutrality. Judging from the "14th Five-Year Plan" of some developed coastal provinces and cities, distributed projects account for almost half of the planned capacity of renewable energy development. As an individual power generation unit, distributed photovoltaics often face shortcomings such as lack of funds and backward technology. As a professional power service provider, power sales companies have sufficient funds and technical support, and can participate in the sharing of funds in the form of equity participation, participate in construction in the form of technical consultation, and even directly control development and operation. In short, the entry of social capital of power sales companies into the distributed photovoltaic market will greatly promote the development of distributed photovoltaic projects.

Building a new power market adapted to the development of new energy

In recent years, the proportion of installed capacity and power generation of renewable energy has continued to rise. By the end of 2020, the proportion of installed capacity of renewable energy reached 24.31%, an increase of nearly 4% year-on-year, and the proportion of power generation reached 9.54%, an increase of nearly 1% year-on-year. Judging from the situation in Gansu, Inner Mongolia, Shandong, and Shanxi, where spot trading is currently being carried out, the proportion of renewable energy is very high, at 45.05%, 34.87%, 32.63%, and 31.91% respectively. However, the randomness and volatility of renewable energy power generation characteristics have also exacerbated price fluctuations in the spot market, often hitting the floor price and ceiling price.

At present, the main problems faced by new energy in entering the power market are: First, in terms of policy, there are contradictions between the existing policy system and the power market system, the guaranteed purchase of renewable energy cannot be well implemented, the guaranteed utilization hours are decreasing year by year, and the income of new energy projects cannot be reasonably guaranteed. Second, in terms of the weight of consumption responsibility, the renewable energy power consumption guarantee mechanism has not been implemented, and there are currently problems with the green power trading mechanism and the green certificate trading market. Third, in terms of settlement deviation risk, under the spot market price, there is often a phenomenon of low electricity prices for positive spot electricity and high electricity prices for negative spot electricity, which does not play a role in protecting income and avoiding risks for new energy medium- and long-term curve contracts.