Employees check the operations of transmission towers in Urumqi, Xinjiang Uygur autonomous region, in April. [CHEN SHUO/XINHUA]
Market-oriented reforms are set to define major directions of the energy sector's development in the coming years, said experts, highlighting content discussed at the recently concluded third plenary session of the 20th Central Committee of the Communist Party of China.
Experts said the third plenary session reiterated the significant role of the market in driving the development of new energy, industrial decarbonization, ensuring stable energy supply and establishing a new energy system.
Specifically, it emphasized advancing independent operations in monopolistic sections and market-oriented reforms in competitive areas of the energy sector, and refining mechanisms for private enterprises to participate in national projects effectively. It advocated for reforms in pricing across the water, energy and transportation sectors, optimizing tiered pricing systems for residential water use, electricity and gas consumption, as well as enhancing refined fuel pricing mechanisms.
Concurrently, efforts to accelerate the planning and construction of a new energy system with improved policies for integrating power generated from new energy sources into the grid and regulating renewable energy consumption were highlighted in the discussions of the third plenary session.
Everbright Securities said monopolistic operations in the power sector primarily refer to the grid segment. It said the previous round of electricity reforms since 2015 already proposed "controlling the middle while opening up both ends", aiming to achieve independent operation of the grid and transparency in revenue. The current challenge lies in the pressure from integrating new energy into the grid, necessitating increased investment, enhanced digitization and greater flexibility, posing higher requirements for the stable and profitable operations of the grid network.
"The new decision on advancing independent operations in monopolistic sections, mainly the grid sector, is a step forward in the 2015 electricity market reform to deal with challenges, mainly stability and profitability issues, after more power from renewable sources connects to the grid. The grid now has almost achieved the level of independent operations with minor adjustments that need government intervention, such as required absorption ratio of power from new energy resources," said Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University.
