How to maintain independence in power reform

Recently, Japan was trapped by the power supply challenge and high electricity prices after the shutdown of nuclear power and began to formulate a power reform plan. According to the official document of the Ministry of Economy, Trade and Industry of Japan, the Japanese electricity industry reform plan will consist of three steps. The first phase plans to create a national coordinating organization for transmission operators by 2015. The second phase will open up the power sales business. The third phase will ensure the unconditional and fair opening of the power transmission and distribution sector, separate transmission and distribution, and release the sales price to achieve The overall marketization of the power sector. This plan has been approved by the highest government authority and is planned to be completed by 2020.

What kind of reference can be provided by the power system of advanced economies?

The discussants of power reform often cited developed countries as examples. Through their different “models”, the model of electric reform is not unique. It must be pointed out that the current state of the developed countries is also not perfect. Its problems are various and its degree is also different. Defining them as "models" ignores this difference and directly compares their forms mechanically. It is also difficult to have a special meaning. The reason for the development of Japan's power reform is also to recognize the drawbacks and inefficiencies of its own power system, and the unification of the French electricity (EDF) is increasingly challenged by the EU's unified power market construction. The "model" of power reform has always been the same, that is, "promote competition, open the power grid, use electricity flexibly, and increase efficiency." Because only in this way, the operating efficiency of electric power can be continuously improved, so that the electric power users can enjoy cheap electric power for a long time. The lessons learned from the developed countries need concrete analysis by specific countries, taking into account their historical inertia, path dependence, and the gap between the current state and the ideal state.

This point is the prerequisite that we must make clear before we discuss the Japanese power reform.

The power reform is first of all efficiency reform—Japan's power reform is also based on the slow progress of the past reform process. Now people are talking about reforms, and they all start with “interest groups” to illustrate the difficulties of reform. The next time this is the case, the question of "reformability" has been reached. However, before this issue, the "necessity of reform" was rarely mentioned. In fact, reforms often start only because they are necessary, and if the necessity is very great, conditions must be created to make it feasible. In terms of power reform, it is still the goal of "big cake", that is, efficiency reform. Specifically, including the most important reduction in the cost of electricity supply, the level of electricity prices has decreased.

However, it must be noted that the reduction in the electricity price level here is a comparison with the hypothetical situation of “not implementing reforms” rather than the historical electricity prices. Because too many determinants of electricity prices, reform is only one of the factors, and the comparison of other factors is not a logical error. For example, the basic reason for the rise in the price of electricity in Germany is the substantial increase in the supply of renewable energy, which is not related to government regulation or market liberalization. But unfortunately, there are too many statements in the reality that the mechanical comparison results are not fixed, so that “reform is a price increase”, and the sound of the price rise caused by other factors is attributed to the “marketization reform”. Misled the people.

The basic goal of Japan’s power reform is also efficiency. In its official decision, it is clearly stated that the price of electricity should be reduced to a minimum through reforms. The basic tools for achieving this decline are to promote competition, prioritize scheduling based on power generation costs, and optimize investment.

Then, can China's power system reforms, including the most important bids for the Internet, introduce competition through competition and supply, and open up markets, can reduce the price of electricity? The answer is yes, which can be drawn from the input-output comparison. Take the United States as an example. At present, its overall tax-free price level is approximately 70%-80% of China's (85% of the total electricity consumption in China's industrial and commercial power consumption. The United States has more than half of its electricity consumption, each representing electricity prices. The main part), but from the perspective of investment, China's thermal power unit's investment cost is only equivalent to 70% of the United States, other basic inputs such as labor, water and other costs are low. Europe's tax-exempt terminal prices are currently equivalent to those in China, and the on-grid price is lower and lower due to the market system design of renewable energy based on marginal cost quotes. This is achieved when the cost of its input factors is higher than that of China.

In addition, at the transmission and distribution end, despite the lack of adequately transparent financial data, a direct observation is that the rise in power grid construction costs is very significant, and it has entered a phase of uneconomical scale, and the organizational cost of the grid-universal structure is already very high. The splitting of the power grid will help reduce organizational costs (of course, there will be a slight rise in transaction costs), and the benefits of natural monopoly economies will also benefit the decline in electricity prices.

How to Solve the Problem of Universal Electricity Service for the Difficulties Group - Directly supplemented Japan has the lowest gap between the rich and the poor. As for the power problems of the most difficult residents, the method adopted is based on a direct supplement to a sound social security system. The design of ladder prices allows low-income people to enjoy lower electricity prices. However, faced with rising prices following the Fukushima nuclear accident, how to further reduce the burden on low-income groups is still a question under study. The “socialtariff” that was implemented in the United Kingdom in 2008 directly discounts these users, but its design and subsidies have been controversial.

One of the major reasons for market-based opponents is that the disadvantaged groups currently enjoy corporate subsidies. If the enterprise is marketized, this group of people will not be able to get universal service. In fact, this part of the subsidies is basically the government's "left-handed right-handed". For example, the rural network construction fund is a special annual fiscal expenditure item, which will be included in the budget. Even if there is an implicit subsidy expenditure in the “one-pot” situation of the enterprise, the degree of subsidy will be determined through market bidding to become explicit and direct subsidies, which can greatly improve the efficiency of subsidies and improve the pertinence of subsidies.

Market transaction costs and organizational costs -

Japan and China are at two extremes Japan has a small land area, probably only the size of Yunnan Province in China, but it has as many as ten power companies that have integrated transmission, distribution, and distribution. Too much broken power systems and market transaction costs, as well as the lack of interconnection and interoperability are obstacles to improving the operational efficiency of the power system. Through the introduction of the OCCTO, replacing the market transaction costs with smaller organizational costs and achieving a greater range of scheduling and operations should be the direction of efficiency improvement.

What is different from Japan is that China has a vast territory with huge regional differences, and the power system has so far basically maintained a unified pattern and is at the other extreme. Even if it is divided into regional grids, its capacity and geographical scope are still much larger than those of Japan. Regardless of the initial conditions of the power system, it is unconvincing to carry out the comparison of machinery in China and Japan that is about to start reforms, and even to establish the grid cooperation organization in Japan to question the necessity of splitting the power grid in China.

One of the main reasons for opposing the grid split is "easy to form barriers between enterprises," affecting the optimal allocation of resources. This is somewhat specious. The driving force for optimal allocation of resources comes from the differences in cost characteristics between regions, which is not related to whether the companies are unified. In the last years of the last century, China’s overall economic situation was depressed, and energy and power consumption even experienced negative growth. Under this circumstance, the digestion of the Ertan Hydropower Station and the Three Gorges hydropower became a big problem, and as long as they were cheap, they could not guarantee their power generation. The capacity is not idle, and unification can not fully guarantee the optimal allocation of resources. At present, the existence of power exchanges between the State Grid and South China Network also shows that it is not necessary for the Grand Unified System to ensure the optimal allocation of resources. The key is whether the power of trade or trade exists.

Grids need to be interconnected to provide the physical basis for trading with each other, but grid companies do not mean that they need to be monolithic, and that resource optimization based on "rules" and "market dynamics" is based on the "optimal allocation of resources" based on "enterprise directives and internal decisions." It does not have superiority, but it is worse in terms of stability, transparency and flexibility. Currently, there are already many contact lines between regional power grids in China, which is enough to establish a “universal market” (this is essentially different from Japan, where there are different grid frequencies in different regions). Due to the high loss of power transmission, Large-scale and long-distance power transmission is in most cases uncompetitive.

How to maintain the independence of power reform - Japan and China face common challenges The reforms have touched on the rebound of power companies is bound to emerge. The same is true of Japan’s reforms. Traditionally, the top ten power companies in Japan have great policy influence. Starting from the establishment of a vertically integrated company in 1951, they have opposed the market-oriented reform of the power industry. This time, the federation of electric power industry associations, FEPC, has also been lobbying to postpone the progress of reforms on the basis of “stabilizing power supply” and strongly opposed the shutting down of nuclear power. In order to maintain the independence of the power reform, the Japanese government established the Electric Power Reform Expert Committee, which is entirely composed of universities and consulting research institutes. The government took the lead in reforms and effectively ensured the neutrality of relevant policies and reform proposals from the procedural and operational levels.

Our country also faces such problems. The current "abandonment of wind curtailment" is a clear example. As far as solving the wind problem is concerned, long-distance transportation is indeed one of the solutions, but there is no doubt that the cost is high. Under the current electricity pricing system, the profit levels of power plants in the eastern region are significantly better than those in the central and western regions, which indicates that the level of their electricity prices is greater than the cost, and the cost-based “benchmark price” is distorted to a higher degree. All consumers take it. This may cause the illusion that long-distance transmission of wind power still has "surplus" in the east. Furthermore, long-distance transmission of wind power as a whole does not have cost-effective advantages, and does not mean that some of them cannot benefit. The wind power owners are currently subject to the problem of “disposal of wind” and the electric power system. They cannot achieve near-consumption of wind power and replace the local thermal power units (from January to October, the average number of hours of thermal power generation in the country exceeds 4,000 hours, and the overall installed growth is approximately equal to In the case of increased load, the load rate has risen relative to last year. It will retreat to other solutions. The transmission of power transmission enterprises can expand the market, enjoy "one line and one price," and have sufficient incentive to participate.

Therefore, the wind power owners and the power grid sector may jointly lobby and recommend that long-distance transmission of volatile renewable energy sources can solve the problem of “disposal”. Long-distance transmission as a major energy project, if it is completed and eventually put into use, will inevitably become a “political project” that needs to ensure a high load rate, and will greatly consume peaking and backup resources in the eastern provinces, making the eastern part “cheap” "The development of renewable energy has lost enough support from grid resources. If this form of development of wind power is formed, it means high energy supply costs and further lock-in of system form. This is not good news for the future development and reform of China's power system, as well as the reliable, safe and flexible supply of energy. This is a major issue that needs attention.

At present, China's energy reform includes the reform of an important project approval system. As a representative of the public interest, the government's approval needs and only needs to be reflected in the project's private net income (return-cost) is not equal to the social net income, in order to circumvent the possibility that private income is built on public losses. This is the general principle of maximizing public welfare. In the case of thermal power projects, this mismatch of revenues is mainly reflected in the environmental impact, so approvals from other parties need to be eliminated. The discussion of “long-distance wind power transportation” now relates to the backbone network structure and design of China’s power grid system, and its shape has a major impact on the entire society (such as wind power access and mode, power system flexibility, and electricity safety, etc.). It is a place where the government needs to strengthen its examination and approval. It is necessary to ensure the avoidance of the development of long-term unsustainable patterns by fully, extensively and transparently involving the public and research institutions.