Will the shortage of water and electricity reappear? How is the thermal power guarantee capability? China Electric Power Union responds to peak summer heat supply point power plants | supply | mechanism | electricity supply and demand | regulation | sustainability | demand | electricity
On June 13th, the relevant business leaders of the China Electric Power Enterprise Federation were interviewed by China Energy Media and responded to the hot issues of peak summer this year one by one.
Zhongneng Media: In the summer of 2022, due to multiple factors such as sustained high temperatures and dry water from major rivers, some hydropower provinces experienced power shortages. Will this situation reappear this year?
Wang Yixuan, Director of the Statistics and Data Center of China Electric Power Union: Hydropower is an important component of China's power supply, and the uncertainty of precipitation has a significant impact on hydropower output. In the summer of 2022, the power supply and demand situation in Sichuan, Chongqing and other places was tense, mainly due to the continued rare high temperature weather combined with severe water shortage.
Since the beginning of this year, the hydropower output has not been effectively improved. Due to the continuous lack of precipitation since the second half of 2022, the water storage capacity of reservoirs in major river basins was insufficient at the beginning of this year, and coupled with the continued impact of insufficient precipitation since the beginning of this year, the hydropower production capacity has continued to decline. In the first four months of this year, the national scale hydropower generation decreased by 13.7% year-on-year, with a year-on-year decrease of 25.9% in April; In May, hydropower production continued to decline, and it is expected that the year-on-year decrease in hydropower generation for that month will further expand compared to April. Affected by factors such as the decline in hydropower production capacity, the power supply and demand situation in Yunnan and Guizhou was relatively tight in the first quarter of this year, and the current power supply in Yunnan is still in a tight situation. The meteorological department predicts that there will be less precipitation and higher temperatures in the eastern part of Southwest China and central China this summer, with most parts of Hubei, northern Hunan, eastern Chongqing, and northeastern Sichuan experiencing 20-50% less precipitation. This may lead to regional meteorological drought, which will have an impact on local power supply and transmission.
Zhongneng Media: Recently, the market for thermal coal production areas has been generally declining, with some coal mines experiencing top warehouse phenomena. Continuous price reductions have promoted sales. What is the impact of this situation on the operational status and output of thermal power enterprises?
Zhang Lin, Director of the Planning and Development Department of China Electric Power Union: Recently, the market price of thermal coal has indeed experienced the longest and largest decline this year. According to the monitoring of the CECI Caofeidian Index by the China Electricity Council, the purchase price of coal in Northern Port has fluctuated frequently this year, and has shown an overall downward trend since March. As of June 2, the average purchase price of 5500 kcal of coal for the whole year was 1067 yuan/ton. Among them, early January was the highest point for the whole year, and the spot price of 5500 kcal was 1226 yuan/ton. In May, the price continued to decline, with a decrease of 227 yuan/ton in this round of prices. This reflects the overall pattern of supply and demand in the current market. On the one hand, in order to enhance the ability to guarantee supply during peak summer, power companies have increased their purchases of electric coal in advance with the support of medium and long-term contracts and strong supplementation of imported coal. As a result, the inventory of power plants has remained at a high level in the past four years, leading to a weakening of the demand for purchasing electric coal in the spot market; On the other hand, the demand for other coal consuming industries such as chemical, metallurgical, and building materials is also weak.
The correction of spot prices in the electricity coal market can theoretically reduce the fuel costs of power plants to a certain extent and alleviate the losses of thermal power enterprises. However, due to the current power plant fuel supply mainly relying on long-term coal, and the pricing mechanism of long-term coal determines that the correlation between long-term coal prices and market prices is not high. Taking Beifang Port's underground coal as an example, the national long-term cooperative closing price of underground coal in June was 709 yuan/ton, only a decrease of 10 yuan/ton compared to May. The corresponding spot market price decreased by 179 yuan/ton on May 31st compared to April 30th. Therefore, this round of market price correction has limited impact on the improvement of the operating conditions of thermal power enterprises.
At present, the overall coal storage of power enterprises is sufficient, providing strong support and guarantee for the summer electricity supply during peak hours. According to the fuel statistics of China Electric Power Union's power industry, as of June 4th, the total coal inventory of coal-fired power plants in the power generation group within the statistical scope was 113 million tons, a year-on-year increase of 21.35 million tons, the highest value in nearly 4 years, and even exceeded the inventory level during the peak winter period in the past two years; The available days for coal inventory in power plants are 25.6 days. However, due to the continuous decline in the quality of coal supply in recent years, the problems of low calorific value and poor structure of stored coal in power plants are widespread, which may to some extent affect the output of thermal power units. Therefore, we call for high attention to the quality of coal supply in power plants, and in the current situation of high inventory, we should optimize the inventory structure as soon as possible to improve the safety guarantee ability of coal storage in power plants. It is recommended to further strengthen quality monitoring and requirements, adjust the current pricing mechanism of "single card consistency" in the long-term agreement as soon as possible, adopt differentiated pricing, strengthen the supervision of medium and long-term contract performance quality and coal quality assessment, adjust the safety and supply responsibility assessment standards of coal producing provinces and major coal enterprises, and use standard coal production/sales volume instead of raw coal quantity for supply responsibility assessment.
China Energy Media: What is the electricity supply and demand situation during this year's peak summer season? What policy recommendations are there?
Wang Yixuan, Director of the Statistics and Data Center of China Electric Power Union: The interweaving and overlapping of multiple factors in power supply and demand have brought uncertainty to the power supply and demand situation. In terms of electricity supply, there are uncertainties in areas such as precipitation, wind and solar resources, and fuel supply. In addition, in recent years, the continuous losses of coal-fired power enterprises have led to insufficient investment in technical renovation and maintenance, resulting in an increase in equipment risks and hidden dangers, all of which have increased the uncertainty of power production and supply. In terms of electricity consumption, macroeconomic growth, export trends, and extreme weather conditions bring uncertainty to the demand for electricity consumption. In recent years, the impact of temperature on electricity consumption has become increasingly prominent, and the "winter and summer" double peak characteristics of electricity load in China have become increasingly apparent. The proportion of summer cooling and winter heating loads is increasing, with some provinces having summer cooling loads accounting for 40% to 50% of the highest electricity load, and even exceeding 50%.
Under normal climate conditions, it is expected that the highest electricity load in China will be around 1.37 billion kilowatts in 2023, an increase of about 80 million kilowatts compared to 2022. If there is a long-term and large-scale extreme climate, the highest electricity load in the country may increase by about 100 million kilowatts compared to 2022. During this year's peak summer season, it is expected that the overall electricity supply and demand in China will be tightly balanced, with some regions experiencing tight electricity supply and demand during peak periods. The main issue is the tight power supply and demand situation in the southern, eastern, and central regions, resulting in a power shortage; The power supply and demand in the Northeast, North China, and Northwest regions are basically balanced.
We suggest that firstly, we fully ensure the safe and stable supply of electricity and fuel during the peak summer season, and strengthen the supervision of the performance of medium - and long-term contracts for electric coal, so as to play a good role as a ballast stone for medium - and long-term contracts. The second is to accelerate the construction of key power grid projects and enhance the regulatory support capacity of the power system. Strengthen power load management, tap into demand side resources, and promote the demand response scale to reach 5% of the maximum regional electricity load as soon as possible. The third is to fully leverage the important role of market mechanisms in ensuring power supply. Further improve the cross provincial and cross regional electricity trading mechanism, and fully leverage the role of the large power grid platform; Establish a sound and perfect mechanism for the formation of market-oriented electricity prices, accelerate the establishment of capacity compensation and cost recovery mechanisms for coal-fired power units, promote the reasonable allocation of auxiliary service costs on the power generation and user sides, stimulate investment in new power sources, and improve the long-term adequacy of power generation capacity; Conduct in-depth research on the linkage mechanism of coal electricity benchmark prices and the floating mechanism of coal-fired grid electricity prices; Strengthen supervision over the implementation of electricity pricing policies in various regions, supervise strict compliance with national requirements, and establish a directory system for high energy consuming enterprises as soon as possible.
China Energy Media: In recent years, with the high proportion of new energy access and the rigid growth of electricity demand during peak hours, coupled with frequent extreme weather and other factors, the pressure on China's electricity supply and demand balance has been increasing. How to tap into the potential of demand side regulation and alleviate the pressure during peak hours?
Zhang Lin, Director of the Planning and Development Department of China Electric Power Union: Currently, there are prominent problems in China's power system, such as insufficient regulation capacity and high supply pressure. In recent years, new energy has continued to develop rapidly, but its inherent randomness, volatility, and intermittency have increased the pressure on system regulation after a high proportion of access to the power system; In addition, some places are affected by meteorological factors such as incoming water and temperature, and there is an urgent need to integrate various regulatory resources such as sources, networks, loads, and storage, especially to tap into the potential of demand side regulation. Through load transfer, load regulation, load interruption and other regulatory methods, as well as industrial optimization, technological improvement, and management enhancement, support is provided for the continuous and stable operation of the system. On May 19th, the National Development and Reform Commission announced the newly revised "Electricity Demand Side Management Measures" and "Electricity Load Management Measures" to the society, in order to further tap into the potential of demand side regulation through institutional regulations.
Demand side management of electricity can effectively reduce peak electricity demand by guiding electricity consumption reasonably, playing an important role in alleviating the gap between electricity supply and demand. In the future, we should explore the potential of demand side response from multiple aspects and promote the transition from "source follows load" to "source load interaction". By implementing demand side response for electricity, guiding users to optimize electricity load, enhancing the emergency regulation capacity of the power grid, it is also of great significance to alleviate the contradiction between electricity supply and demand, promote the consumption of new energy, and ensure the safe operation of the system. One is to focus on improving the flexibility of large industrial high load capacity. The second is to guide electric vehicles to charge and discharge in an orderly manner, and encourage research on two-way interaction between vehicles and the grid. The third is to promote the large-scale and large-scale application of technologies such as shared energy storage and virtual power plants, and to achieve the aggregation and participation of a large number of diverse and dispersed flexible resources in system regulation. The fourth is to promote breakthroughs in large-scale long-term energy storage technology, promote deep coupling between emerging demand side resources such as hydrogen and new energy, meet the multi day or longer time scale regulation needs of new energy, and promote the transition from local system balance mode to dynamic balance.
