"Steady progress", Zhejiang power market reform bold test road

2023-09-13 09:32:33

Zhejiang has established a provincial electricity market system in which the spot market and the contract market complement each other, with the electricity from outside the province as the boundary condition of the provincial market. Up to now, five trial operations of settlement have been carried out.

Since the launch of a new round of electric power system reform in 2015, Zhejiang's electric power system reform has provided a model for the national pilot electric power market reform under the promotion of all parties, boldly testing the road. In 2017, Zhejiang was listed as one of the first eight pilot areas for the construction of electric spot market, which is the first pilot province to introduce advanced concepts of foreign electric power market in China. On May 30, 2019, Zhejiang Electric Power Spot Market officially launched a simulated trial operation. With the goal of "safety, economy and green", it established a provincial electric power market system in which the spot market and the contract market complement each other, and formed a market model of "medium and long-term contract for difference + centralized clearing of all spot electricity". Basic situation of

Zhejiang power market development By the end of 2022, the installed capacity of Zhejiang power grid has reached 6754.15% year-on-year growth, of which: thermal power accounts for 82.4% (gas turbine installed capacity accounts for 7.2% of thermal power); hydropower accounts for 2.64%; nuclear power accounts for 4.22%; Photovoltaic power accounts for 6.14%; wind power accounts for 4. Zhejiang power grid is a typical receiving end grid with dense grid structure, frequent network congestion and high proportion of incoming external electricity. On the

electricity side, in 2022, the total electricity consumption of Zhejiang Province was 579.93 billion kWh, an increase of 5. The total electricity consumption was 494.38 billion kWh, an increase of 4. The maximum daily electricity consumption was 1.9 billion kWh. On July 11, 2022, the highest load of unified regulation was 88.97 million kilowatts, an increase of 2.

In terms of market transactions, Zhejiang organized 298 electricity market transactions in 2022, with a cumulative turnover of 275.886 billion kilowatt-hours. 47% of the annual electricity consumption. Among them, there were 50 green electricity trading organizations, with 2.503 billion kilowatt-hours of electricity traded and 21,000 green certificates traded;

As the first batch of pilot provinces of electricity spot market, the construction of Zhejiang electricity spot market aims at "safety, economy and green", and establishes a provincial electricity market system in which electricity spot market and contract market complement each other. Take the incoming calls from outside the province as the boundary condition of the provincial market. Up to now, five trial operations of settlement have been carried out. In September

2017, after Zhejiang was listed in the first batch of pilot provinces of spot electricity in China, the Zhejiang Provincial Government and the Provincial Development and Reform Commission respectively issued the Comprehensive Pilot Plan for the Reform of Zhejiang Electric Power System and the Zhejiang Electric Power Market Construction Plan. The construction goal of "establishing a provincial electricity market system with the electricity spot market as the main body and the electricity financial market as the supplement" is put forward.

As the first batch of construction pilot projects, in October 2017, Zhejiang fully drew on the experience of the international advanced power market construction at that time, and through international competitive negotiations, selected PJM Company and China Electric Power Research Institute Consortium as professional advisory teams to guide the design and construction of the spot power market. In March

2019, the eighth Zhejiang Electric Power Market Design and Rules Compilation Symposium was held, and the preliminary draft of Zhejiang Electric Power Market Operation Rules was issued, which comprehensively carried out the practical operation training for users of Zhejiang Electric Power Market Technical Support System and fostered market players.

The second stage: Zhejiang electric power market operation practice

Zhejiang electric power spot market started the simulated trial operation ceremony on May 30, 2019, and formally entered the trial operation stage. As of June 2023, five formal settlement trials have been carried out.

2021, due to the continuous rise of coal and natural gas prices in the upstream of the country, the cost of thermal power enterprises in Zhejiang Province has been hanging upside down for a long time, operating at a loss, and even the risk of cash flow rupture. In order to alleviate the operating conditions of thermal power enterprises, under the unified deployment of the state, Zhejiang has raised the upper limit of market-oriented transaction price, and the electricity price of end-users has increased. For a long time, Zhejiang Province and Jiangsu Province have taken the reduction of electricity price as the focus of their work in the field of electric power. Considering that Zhejiang's power supply and demand will inevitably be tight in 2022, if the trial operation of the electricity spot market is carried out in this case, it may lead to a further rise in electricity prices, and there is a downside risk to Zhejiang's economy in 2022. Zhejiang has suspended the operation of the electricity spot market until now.

In 2023, in order to speed up the construction of a new energy system, further deepen the reform of the power system, and comprehensively promote the construction of the "medium and long-term + spot" provincial power market system. Zhejiang has issued relevant documents such as the Three-year Action Plan for Promoting Green and Low-carbon Energy Development and Guaranteeing Supply and Price Stability in Zhejiang Province (Zhe Zheng Ban Fa [2022] No.60) and the Comprehensive Pilot Plan for the Reform of Zhejiang Electric Power System (Zhe Zheng Fa [2017] No.39) to promote the steady progress of Zhejiang Electric Power Market Reform. Characteristics of

Zhejiang Electric Power Spot Market Mode (Settlement Trial Operation Rules)

The provincial electric power market is composed of

market members, mainly including coal power, hydropower, gas power and nuclear power units. In principle, take the unit as the unit to participate in the market, and meet the requirements of environmental protection and ultra-low emission. In the initial stage of the market, mainly for the power generation side, wind power and photovoltaic and other new energy units do not participate in the market, timely release of 110 kilovolt and above voltage level users.

Contract market: to help market members lock in most of the trading volume and its price in advance through medium and long-term transactions, so as to avoid the price risk in the spot market. The initial market is mainly a government-authorized contract, which is a kind of contract for difference signed by power generation enterprises and power grid companies (acting for non-market users) under the leadership of the government, realizing the transformation from planning to market competition.

Spot market: mainly including day-ahead market and real-time market. The day-ahead market adopts unilateral centralized clearing on the generation side, and the power users do not quote. The bilateral clearing mode of user quotation will be introduced in due course in the future. Through the joint optimization of electric energy and reserve, the day-ahead market will be cleared with the goal of minimizing the generation cost, and the day-ahead dispatching plan will be prepared on the basis of the clearing results. The real-time market uses the declaration information sealed before the day, through the joint optimization of electric energy and frequency modulation, with the goal of minimizing the cost of power generation, to clear the real-time market.

Ancillary service market: In the initial stage of the market, the ancillary service market mainly includes reserve and frequency modulation. At present, the reserve market is still under development. Power generation enterprises carry out frequency modulation quotation a few days ago, centralized bidding in the spot market, and joint clearing with electric energy. Market positioning of

spot market

: Zhejiang power market is mainly positioned to optimize the allocation of resources in the province, and to establish a balanced power market on the premise of the balance of power supply and demand in the province and the safe and stable operation of the power grid. At present, the transaction results of the inter-provincial market are regarded as the boundary conditions of the intra-provincial market.

Pricing mechanism: The contract market adopts the form of contract for difference, which is settled with the spot market price. The spot market adopts the nodal price pricing mechanism. In the initial stage of the market, the nodal price includes the electric energy price and the congestion cost, the nodal price is adopted on the generation side, the weighted average comprehensive price is adopted on the user side, and the settlement period is 30 minutes.

Market settlement: The "zero-sum" settlement mode on the power generation side is adopted for the trial operation of the whole month settlement. According to the principle of "day-ahead benchmark, real-time difference and contract price difference", unbalanced funds are returned or apportioned among market participants, and power grid enterprises do not bear market profits and losses. Provincial electric power trading institutions are responsible for providing settlement basis, and power grid enterprises are responsible for settlement. One of the problems

in the development of

Zhejiang power market is that the construction and development of Zhejiang power market lags behind. After the successful completion of five trial operations of spot settlement in Zhejiang, considering that the operation of the electricity spot market may bring high electricity prices and affect the orderly and sound development of the economy, the construction of the electricity spot market has been postponed. Up to now, the basic rules of the spot market have not yet been released, and they are all implemented by the spot settlement trial operation scheme.

Two, the Zhejiang electricity spot market is not mature enough, and the user side has not entered the market. Zhejiang is a big province of national economic development, with many small and medium-sized users, sensitive electricity prices and weak price affordability.Therefore, Zhejiang pays attention to the construction of system and mechanism, the stability of electricity price for end-users, and the principle of gradual and batch entry into the market. Zhejiang spot in the follow-up process of unilateral and bilateral spot trading convergence, the main scope of the two sides to participate in the market is not clear, if the batch into the spot market may bring too much unbalanced funds and redundant rules.

Third, the key issues of the market need to be discussed and solutions put forward. Core issues such as the unequal scope of market participation, how to effectively link the medium and long-term market with the spot market (how to decompose the medium and long-term contract curve), and how to share the unbalanced market funds still need to be solved. In addition, the convergence of new market players (energy storage, virtual power plants, etc.), spot market and ancillary services, new energy spot and green power trading also need to be solved urgently.

As the "stormtrooper" of the power market reform, Zhejiang took the lead and dared to explore the way in the early stage of the reform, providing other provinces and cities with advanced foreign ideas to break through the barriers of power reform and a model of power reform combined with China's reality. However, the reform can not be achieved overnight, Zhejiang has encountered the bottleneck of its own development contradictions and conflicts, although the pace of reform has slowed down, but Zhejiang has never given up the determination to adhere to the reform, steady progress, has been actively exploring and practicing.

Under the general trend of deepening the reform of the national electric power system, Zhejiang will dare to break through the bottleneck in the reform and development, give full play to the role of the government's macro-control and effective market resource allocation, speed up the construction of the spot market of electric power, and form a unified, open, competitive and orderly electric power market system as soon as possible. In order to realize the sharing, mutual benefit and optimal allocation of power resources in a wider range of the country, we should move forward.

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