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Author: Source: the Internet Published time: March 26, 2015
The Opinions of the State Council and CPC Central Committee on Deepening Electric Power Industry Reform (ZF Doc. No. 9 (2015)) has been issued, which is a milestone in the energy and electric power industry. From GF Doc. No. 5 to GF Doc. No. 9, 13 years has gone by and a new journey for electric power reform has started.
We have good reason to believe and expect that, through further deepening of reform, there will emerge a brand-new relationship between the electric power industry and the socioeconomic environment in the power sector in a new economic “normal”, thus giving rise to “new power”.
That was a historic turning-point.
As pointed out by Xi Jinping, general secretary of the CPC, history can be perceived more clearly with the passage of time. We remember that this reform directly inherits that power industry reform 13 years ago. In retrospect after such a long time, we are safe to say that the previous reform was historically significant, satisfactorily fulfilling its historic mission appropriate for that stage of history: It not only adapted to the rapid socioeconomic development with its urgent requirements, but also provided a wealth of experience and laid the groundwork for the subsequent new reform.
Installed capacity of 1kW per capita is the most concise and persuasive number that is also an epitome and symbol of electric power reform and development over the past 13 years.
During this period, the installed capacity and gross generation in China have dramatically increased from 357 million kWh and 165 million kWh to 1.36 billion kWh and 5.5 million kWh, ranking China as the world’s No. 1 in terms of gross generation and power grid size. Per capita installed capacity has grown from 300Wh 13 years ago to 1kWh at present with per capita power consumption already exceeding 4,000kWh, which are at the international average level. Meanwhile, power service in China has also improved significantly and the power supply reliability in rural areas have greatly improved; basically, the same power tariff is applied to both urban and rural areas and nearly everyone has access to electric power.
These impressive achievements would have been impossible without the previous power industry reform. Under the leadership of the CPC Central Committee and the State Council, the monopoly in the electric power industry has ended, essentially solving such problems as a directive-based planning system and the lack of separation between government and enterprises and between power generation factory and grid. An initial competitive landscape emerged, where diverse market players could compete; a diversified electric power market system was initially formed and the mechanism of electric power pricing was gradually perfected, resulting in a great deal of experience in market-based power trading and regulation. These reform efforts and achievements have greatly promoted the development of the power industry. Since the new century began, the power industry has better met the electric power needs for socioeconomic development and people’s lives, providing support for the country’s development in leaps and bounds from one trillion US$ to 10 trillion in its GDP and then to the second largest economy in the world.
Looking ahead from this historical point of juncture, against the backdrop of fully promoting the “Four Comprehensives” strategy and realizing the “Chinese Dream of National Rejuvenation”, the electric power industry cannot afford to settle for the status quo. It has to go out of its way to identify its inadequacy and problems. In today’s China, the electric industry has the conditions to aim higher and it has to do so: It has to build a “New Power” that is worthy of this great era.
Further deepening the reform is a decisive and important solution to the achievement of “New Power”. As with a reform, there is no way to complete it at one go. Undoubtedly, when the last electric power industry reform has released a massive potential for development, we did not essentially solve some serious conflicts and fundamental problems constraining the scientific development of the electric power industry. Examples are plentiful: the lack of a market trading mechanism and low resource efficiency; a market-based pricing mechanism not yet available; incomplete transfer of government functions and imperfect coordination in various plans; difficulty in development and utility of new energy and renewable energy; relevant legislation somewhat asynchronous.
As pointed out by General Secretary Xin Jinping at the Third Plenary Session of the 18th Central Committee of the CPC, a series of challenges and conflicts are presented in the development of China and there are many difficulties and problems on the way ahead, which certainly include problems with efficiency, fairness and justness, environmental pollution, etc. in the electric power industry.
Problems necessitate reforms, which are in turn the key to solving the problems. 13 years later, it is time to hand over the baton in the relay race.
A new era was ushered in. In 2015, the journey of electric power industry reform was rescheduled and resumed its course from a brand-new starting point in history.
These two major reforms share the direction of market-based reform and the goal to enable the electric power industry to achieve fast and quality development. In this continuity of reforms, it is highly noticeable that the times have changed and the starting point for the reform is no longer the same – the background for the reform has changed greatly. Therefore, the conditions for the issuance of Doc. No. 9 are completely different from those 13 years ago.
It has come at the right moment in a great era. Its greatest characteristics are that the Chinese economy is in a “new normal”, which raises new requirements for the electric power industry reform from the demand side and creates conditions at the same time.
Unlike the last electric power industry reform when the Chinese economy was on the eve of unprecedentedly explosive development, the current Chinese economy is in a “new normal” and shifting from high-speed growth to growth at a moderately high speed. In macro terms, the overall demand is moderate and the demand for electric power will naturally decrease accordingly. Meanwhile, as the Chinese economy is developing with focus on quality and efficiency in a lean manner and undergoing a profound restructuring, the efficiency of economic development in China will certainly improve, thus reducing the demand for electric power in micro terms. All these create a lax environment for deepening the electric power industry reform. In addition, the Chinese economy is shifting gear toward new growth areas, which necessitates the deepening of the electric power industry reform in order to create cleaner, more efficient, and diversified “new power”, adapt to and lead the “new normal”.
