Main and auxiliary grid separation plan has been submitted to the State Council for approval

China Securities Journal reporter learned from an authoritative source a few days ago that China's main grid and auxiliary separation plan has been reported to the State Council for approval. The separation of main and auxiliary grids, if implemented, means that China’s power system reform that has stagnated for more than eight years since 2002 is expected to break the ice. However, in order to break the grid monopoly as the original intention of the separation of the main and auxiliary, it is necessary to adhere to the market-based mechanism in the design of the plan, to avoid the incomplete reform, resulting in a new monopoly.

The disclosed main and auxiliary grid separation plans show that China Electric Power Engineering Consulting Group and Gezhouba Group will form China Electric Power Engineering Group, and the Hydropower and Hydropower Engineering Construction Group and the Water Conservancy and Hydropower Construction Group will form China Power Construction Group. State Grid Corporation of China, China Southern Power Grid's provincial network survey design, hydropower, thermal power, transmission and transformation construction companies and construction companies will be assigned to these two major new groups.

It is not difficult to see that this scheme will strip out assets such as the exploration and design of the State Grid and China Southern Power Grid as well as power construction and repairs, and intends to reduce the “power sphere” of the two major power grids. However, through the integration of the two major new groups formed, it is very likely that monopoly will be formed again. This is because there are currently about 30 power survey and design agencies and power construction and repair companies in the country, which are equally divided into two major new groups. If they are "clustered," they will not be able to form full competition.

In fact, current main and auxiliary grid separation schemes will not “gripping” the grid companies because the power grid construction assets have not been stripped from the grid, and the electrical equipment assets extended upstream of the grid have not been stripped. According to analysts, if the construction of the power grid is not separated from the power grid, the cost of the power grid construction is difficult to be transparent, and lax cost control will indirectly force up the price of electricity to pay for the cost of power grid construction. If the assets of the electrical equipment held by the grid cannot be separated, the unfairness of the situation where the referee and the athlete compete on the same ground cannot be changed.

It is recognized in the industry that the separation of main and auxiliary grids is a necessary condition for the formation of the electricity market and a necessary condition for transforming the mode of development of electricity. According to the “Power System Reform Plan” promulgated by the State Council in 2002, the separation of main and auxiliary grids involves the adjustment and reorganization of grid-assisted business units and “three production” and diversified enterprises. To achieve the above goals, it is not enough to rely solely on the separation of main and auxiliary power grids. In view of the crux of China's current power system, the reform process can only be said to have just begun.

In terms of horizontal direction, the current natural monopoly formed by two major power grid companies across many provinces needs to be gradually resolved through restructuring. From the experience of foreign power grid layouts, the grid and the grid are not necessarily controlled by one company. China has a vast territory and should encourage the formation of regional grids such as the North China Power Grid and the East China Power Grid, encourage competition between the grid and the grid, reduce grid construction and operating costs, and strengthen the market-oriented awareness of grid operation and management.

In the vertical direction, the construction of transmission lines with different voltage levels should be reasonably divided and effectively cooperated. The current status quo is that China’s high-voltage power transmission grid construction and low-voltage distribution network construction are mastered by power grid companies. This to a large extent enables the power grid to have autonomy in power grid construction, and the delivery of limited construction funds is difficult to effectively monitor, which is to a certain extent. This led to a long-term weak state of China's distribution network construction.

Grid dispatch should be isolated from the grid and become a non-profit independent public agency, while the grid is focused on grid investment and operations. Establish a power dispatch trading center and implement power generation bidding. After the establishment of regional power grids, power dispatch trading centers were set up respectively, and power competition and trading centers implemented market competition.

Compared with the ideal picture of the power system reform, the separation of main and auxiliary power grids carries eager hopes. However, since the reform of the power system will once again break ice, it must reach deeper problems. Therefore, the entire reform may be slowed down. However, if you do not choose the course, you may have the effect of making a difference.