Guangzhou Power Exchange Center Opens in Guangzhou Symbolizing the Further Deepening of Market-oriented Power Reform in Southern China

On the morning of March 1, Guangzhou Power Exchange Center held its opening ceremony. The inauguration of the center is CSG’s important measure to comprehensively implement Opinions on Further Deepening Power System Reform and its supportive documents. It symbolizes that the market-oriented power reform in southern China is further deepened. The opening of the center is quite remarkable in terms of comprehensively establishing the market system in southern China with effective competitions, forming a market-oriented mechanism for electricity pricing, advancing structural reforms on the supply side and promoting the optimal allocation of regional power resources.

It is said that Guangzhou Power Exchange Center is set up on the basis of a shareholding system with CSG as the controlling party. Under the supervision of the government, it provides the market with open, standard and transparent power exchange services. It is mainly responsible for implementing China’s West-East Electricity Transmission Project, implementing state mandatory planning and framework agreements between local governments, carrying out trans-regional and trans-provincial market-oriented transactions, and promoting inter-provincial surplus and shortage adjustment as well as clean energy consumption and conservation.

Power exchange centers in southern provinces are responsible for electricity marketization in their own provinces; while Guangzhou Power Exchange Center collaborates with other power exchange organizations according to market rules so as to ensure the effective connection between and smooth implementation of both trans-provincial and intra-provincial market-oriented exchange businesses, and to gradually promote market convergence.

CSG stated that it would continue to carry out the 9th document issued by the central government and to meet the supply side’s demand for reform, namely, “to cut excessive production capacity, to reduce inventory, to remove leverage, to cut costs and to improve weak links”. It would spare no efforts to promote structural reform on the supply side, improve power supply service capability and strongly support the social and economic development of the five provinces in southern China.

CSG is reportedly the experimental field of the country’s power system reform. It has long been implementing the decisions of the country’s power system reform, acting as the promoter of reform and genuinely advocating, supporting, and devoting to the reform. It took the lead in reform of pricing for electricity transmission and distribution in Shenzhen. There, the first mixed ownership power supply enterprise that provides incremental power distribution has been founded in Qianhai. It also actively explored market-oriented power reform. First, on the basis of implementing the mandatory planning of West-East Electricity Transmission and the framework agreements between local governments, it introduced inter-provincial market-oriented exchange mechanism to balance the interests of the east and the west as well as of hydropower and thermal power, and to enhance clean energy consumption and conservation. In 2015, CSG transmitted 189.1TWh of electricity from the west to the east, among which 150TWh was hydropower, which relieved the pressure of underusing water resources in western China. Second, it set up power exchange centers in Guangdong, Guangxi, Yunnan and Guizhou in succession according to governmental authorization so as to actively carry out market-oriented exchanges like direct exchanges between power consumers as well as replacement between hydropower and thermal power generation rights within the provinces. In 2015, the amount of power trading by CSG reached 88TWh, which gained experience for and explored methods of power marketization, and effectively supported the development of substantial economy.

Professor Xia Qing of the Department of Electrical Engineering from Tsinghua University said in an interview that the establishment of Guangzhou Power Exchange Center was an important step towards a new round of the country’s power system reform and power marketization. A relatively independent power exchange center can ensure just, fair and open exchanges and enliven the market.

Chen Qixin, associate professor of the Department of Electrical Engineering and assistant to Dean of Energy Internet Innovation Research Institute of Tsinghua University also thinks that a relatively independent exchange center is neutral, which can ensure effective and orderly competitions in the market. Open, regular and independent power exchange centers are the platforms for market members to carry out power exchanges and the cornerstone of ensuring power market equity.