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Industries such as Shaanxi direct power purchase transaction capacity expansion

ECHEMI 2019-11-01

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After the completion of the trial operation at the end of last year, the direct power purchase transaction promoted by Shaanxi, a major energy province, took a big step forward again. The reporter learned from the development and Reform Commission of Shaanxi Province that in the first half of this year, it was preliminarily determined that the trading volume of direct power purchase will reach 1.5 billion kwh, which is far beyond the scale of its attempt in the second half of last year: 370 million kwh. Decision makers in Shaanxi are eager to reduce the cost of electricity consumption for local enterprises through market-oriented transactions. In their attempt at the end of last year, they successfully saved the cost of about 2 cents per kilowatt hour for the electricity consumption enterprises participating in the transaction. Efforts to promote direct power purchase transactions are a microcosm of Shaanxi's determination to realize more local transformation of resources and energy as a major energy province. They believe that reducing electricity price through market-oriented transactions can help local energy consuming industries gain better cost advantage and attract more investment. Behind this is the accelerated downward environment of the energy industry, and the intensified regional competition among the major energy provinces. In the second half of last year, Shaanxi started the pilot experiment of direct power purchase.

According to the data provided by Shaanxi Provincial Development and Reform Commission, at that time, a total of 12 local household electricity enterprises completed independent consultation with 6 power plants, signed an agreement to deal with 370 million kilowatt hours of electricity, which was executed in November and December of that year. The direct power purchase transaction refers to the direct transaction between the power plant and the end-user. The power grid only charges a specific power transmission and distribution fee, so as to break the existing pattern of exclusive power purchase and sale of power grid enterprises and reduce the intermediate cost of power transaction. As a major energy province that enriches coal and other resources, Shaanxi has been hoping to promote direct power purchase transactions and reduce the cost of power consumption for enterprises. The basis of the pilot project is the Interim Measures for direct transaction between power users and power generation enterprises in Shaanxi Province (hereinafter referred to as the measures) adopted in July last year. According to the measures, industrial enterprises with power voltage level of 35kV and above, high-tech enterprises with voltage level of 10kV and above and strategic emerging industries will be able to have a single unit capacity of no less than 300000 kilowatts with Shaanxi power grid. The price of electricity on grid is determined by the two sides through independent consultation.

The local government issued the detailed rules for the implementation of direct transactions between power users and power generation enterprises in Shaanxi Province (Provisional), which further clarified the relevant conditions, methods and guidelines for the local direct power purchase transactions. The core of the new transaction mode is the independent negotiation of electricity price and power consumption scale. The summary table of the first batch of transactions provided by Shaanxi Provincial Development and Reform Commission shows that the 12 household electricity enterprises participating in the transaction belong to iron and steel, non-ferrous metals, energy and chemical industries, and the transaction price is 0.5-3.0 points / kWh, with an average of 2.1 points / kWh. The price of electricity has a great influence on many local enterprises. He Qiang, the owner of a calcium carbide factory in Yulin, said: "for calcium carbide enterprises, every 7 cents reduction in electricity price will reduce the production cost by 200 yuan per ton." He Qiang's factory is located in Shenmu county, where he purchases raw materials such as coke and sells products to Hancheng, Datong and Fuzhou.

At present, the dividend of direct power purchase transaction has not spread to the relatively small enterprises such as he Qiang. Most of the enterprises involved in the transaction are those that have formed a considerable capacity scale. For example, in Northern Shaanxi, Shenmu Chemical Industry Co., Ltd. and Shaanxi Huadian Yuheng Coal Power Co., Ltd. Yuheng power plant, Shaanxi Jintai Chlor Alkali Chemical Co., Ltd. and Shaanxi qingshuichuan Energy Co., Ltd. The company has signed 32 million and 24 million kilowatt hours of direct power trading contracts. Among them, the transaction price of Shenmu Chemical Industry Co., Ltd. is 3 cents cheaper than the market price per kilowatt hour. According to the calculation, the new transaction saves the production cost of 960000 yuan for the enterprise. However, he Qiang obviously hope to enjoy the institutional dividend of the new policy, which is what the decision makers in Shaanxi Province are happy to see. Earlier, officials in Shaanxi Province told reporters that they would further open access to users and trade electricity scale in the local area, and play a decisive role in market allocation of resources. According to the data provided by Shaanxi Provincial Development and Reform Commission, in the first half of this year, the number of local power consumption enterprises planning to participate in direct power purchase transactions increased from 12 last year to 39, the number of power generation enterprises also increased from 6 to 15, and the transaction scale in the first half of this year reached 1.5 billion kwh. The competition is intensifying, which is the epitome of Shaanxi's determination to realize more local transformation of resources and energy.

Shaanxi is not the first province to propose and carry out direct power purchase trading pilot. Before that, several provinces such as Yunnan, Inner Mongolia and Guizhou have carried out direct power purchase trading or multilateral trading pilot. However, many attempts are not smooth. Due to the impact on the interests of power grid enterprises, there are many obstacles in the promotion of direct purchase in the country. In 2009, the national development and Reform Commission approved Liaoning Fushun Aluminum Plant to carry out direct transactions with Huaneng Yimin Power Plant. Through independent consultation, the final power purchase price of Fushun Aluminum Plant was 9 cents cheaper than the original price. However, in 2010, the direct purchase of electricity was stopped by the national development and Reform Commission, allegedly because reducing the cost of electricity consumption is not conducive to the achievement of energy conservation and emission reduction goals.

Disclaimer: ECHEMI reserves the right of final explanation and revision for all the information.

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