The power industry reform in China 2015: Policies, evaluations and solutions

Abstract

More than a decade ago, in China׳s electric power industry, the investment for generation side and power grids was inadequate and the gap between power supply and demand kept enlarging. In order to relief the problems above, power industry reform has been carried out in 2002 under the guidance of “No. 5 Document” by the Central Government. The reform in 2002 has made a series of achievements, including the enhancement of operation efficiency of power industry and the fulfillment of power demand all over the country. During the past decade, as the rapid development of the society and economy, the external environment of China׳s power industry has changed greatly. However, the pricing and planning mechanism of China׳s power industry still operates following the requirements of “No. 5 Document”, this has led to a number of problems including twisted pricing mechanism, irrational power system planning, inefficient utilization of renewable energy and so on. These problems have not only hindered the development of power industry in China for quite a long time, but also brought negative influence on the business operation of upstream and downstream industries. Therefore, Chinese government has issued “No. 9 Document” in 2015 and launched a new round of power industry reform. Policies were carried out to form new pricing mechanism, new policies about renewable energy generation and power system planning process to solve the problems mentioned above. This paper has reviewed the history of reform in 2002 and summarized the existing problems of China׳s power industry. Besides, the main policies of “No. 9 Document” were deeply analyzed, and their significance as well as backwards were illustrated. At last, solutions were proposed accordingly and these solutions have considerable theoretical and practical significance to China׳s electric power industry reform in the future.