What’s new: Prices surged in Guangdong province’s monthly spot power market when trading resumed on Monday following a five-month suspension of the pilot program.
Prices on the day-ahead market, the main arena for trading power, averaged at 0.8345 yuan ($0.13) per kilowatt hour for coal-fired electricity on Monday, 80% higher than the local benchmark price set ahead of time by the government, data released by the Guangdong Power Exchange Center show. The price fluctuated over the week, ending at 0.72987 yuan per kilowatt hour on Friday.
The pilot program resumed on Sunday, when generators began submitting bids for the day-ahead market on Monday and successive days, with market clearing results published daily and payment settlement occurring five days after the trading date, according to rules released by the exchange center (link in Chinese).
The background: Guangdong is one of eight regions selected by the country’s economic planning and energy authorities to pilot spot power markets, as part of broader reform of the electricity wholesale market. The others are the provinces of Zhejiang, Shanxi, Shandong, Fujian, Sichuan and Gansu as well as part of the Inner Mongolia autonomous region.
Of those, Guangdong — a major exporter of everything from electronics and components to textiles and garments — has the highest GDP and consumes the most electricity. It would hence likely be the market with the highest trading volume, according to a working paper published by the Cambridge Working Papers in Economics in September.
The province completed five rounds of pilot spot market operations in May this year, but due to factors including an ongoing power shortage as well as restrictions caused by the “dual-track” pricing mechanism, the program was suspended.
In 2020, Guangdong’s total electricity consumption reached 693 terawatt hours, approximately 9.2% of China’s total, the report added.
Read more China’s Guangdong Scraps Fixed Electricity Prices for Industrial Users
Contact reporter Kelsey Cheng (kelseycheng@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)
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