Analysis of Global Power Market
Analysis of China's Power Operation Market
Analysis of On-grid Prices of Thermal Power and Hydropower
The on-grid tariffs of coal-fired power projects are determined by factors including, but not limited to, the benchmark price and the price
compensation. The benchmark price is announced by primarily by the NDRC in consideration of the average cost of coal-fired power generation,
which is affected by various factors, including the average utilisation hours and the depreciation of equipment. The price compensation is provided
when certain standards such as denitrification and ultra-low emission are met.
The relevant pricing authorities primarily use the following three pricing methods to determine the on-grid tariff: (i) local price backward pricing; (ii)
individual project pricing; and (iii) benchmark pricing;
➤ Hydropower projects whose generated power is subject to inter-provincial transmission are subject to the local price backward pricing method
where the NDRC determines the on-grid tariff. Such on-grid tariff is determined with reference to the local market price at the power receiving
side, after deducting the transmission price charged by the grid company.
➤ Certain hydropower projects are subject to the individual project pricing method where the on-grid tariff is determined by the relevant pricing
authority on a case-by-case basis. One of the key considerations is the construction and operating costs and the rate of return of the projects.
➤ Other hydropower projects are usually subject to the benchmark pricing method where the on-grid tariff is calculated based on the average
costs of hydropower stations of the same category.
Average On-grid Price of Thermal Power, China,
Average On-grid Price of Hydropower, China,
2016-2018
RMB per MWh
800
700
RMB per MWh
280
695.1
664.9
647.3
275
600
270
500
264.6
265
400
362.4
371.7
378.4
260
2016-2018
263.5
258.9
0
2016
2017
2018
0
2016
2017
Coal-fired
Gas Power
FROST &
SULLIVAN
2018
Source: NEA, Frost & Sullivan
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