Analysis of Global Power Market

Analysis of China's Power Operation Market Current Major Market Pricing Mechanism of Power Market Trading Process of Bilateral Agreement Power Company Bilateral Agreement Power Exchange Centre Data Submission Electricity Sale Company or Electricity Consumer Pass Deal No Pass Transaction Approval Trading Process of Centralised Bidding Power Exchange Centre Biding and Trading Notice Electricity Sale Company or Step-wise Bidding Electricity Consumer Power Company Step-wise Bidding Match and Trade Result Trading Process of Listing Transaction Power Company Supply Volume and Price Power Exchange Centre Demand Volume and Price Electricity Sale Company or Electricity Consumer Highlights ➤ In March 2015, Policy No. 9 kicked off this new round of electricity system reform. In the current reform, the government has released a package of schemes to ensure that pricing of electricity would shift from administrative decision to result of market competition. ➤ In the original power system, the government determines the planned power generation based on power demand. National grid companies purchase power from power generation plants based on the plan at benchmark prices, which are also regulated by the government. With the promotion of the power system reform, the power sales through market-oriented power transactions keep increasing and accounted for around 30% of China's total power consumption in 2018. ➤ Currently, there are 2 major transaction mechanisms, which are bilateral agreement and centralised bidding, and one auxiliary mechanism, listing transaction. ➤1) Under the bilateral agreement mechanism, the two transaction counterparties negotiate and make an agreement on the electricity transaction volume and the price which is consisted of a basic price and a floating part depending on the production cost or the product prices of downstream industries. ➤ 2) The centralised bidding is usually held periodically (i.e. monthly) at the provincial power exchange centre. The two transaction counterparties make two-way quotations to the exchange centre, and the exchange centre will match the quotations of two counterparties based on the high-low matching principle and/or the uniform pricing rule which uses the arithmetic mean of the last successful matched pair as the uniform price for all trading participants. 3) Under the listing transaction mechanism, the power supply side or the demand side list the power supply or demand volume and prices at the power exchange centre. A deal is made if accepted by the eligible counterparty and passed the safety check. Accepted by the Eligible Counterparty Safety Check and Bilateral Confirmation Deal FROST & SULLIVAN Source: Frost & Sullivan 51

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