The coal power capacity price policy is expected to be introduced within this year

On September 14, the reporter of China Securities News exclusively learned from people close to the policy department that the coal power capacity electricity price reform policy that the market is concerned about is expected to be introduced within this year, or officially implemented from January 1, 2024. Coal power companies are expected to increase profits stimulated by the policy.

Industry insiders said that with the continuous expansion of new energy installations, the capacity utilization rate of coal-fired power units will continue to decline, resulting in a decline in yield. After the capacity electricity price mechanism is clarified, all kinds of power sources (including coal power, wind power, photovoltaic, nuclear power) can compete fairly in the all-electricity market, determine electricity prices based on market conditions, and a new round of value reshaping of the coal power industry will begin.

Capacity electricity price cost bearing will be clear

It is understood that the coal power capacity price mechanism is only applicable to the unified coal power units that are put into operation in compliance with the regulations. For coal-fired power units that do not meet the national requirements for energy consumption, environmental protection and flexible regulation capacity, the capacity electricity price mechanism will not be implemented.

In the future, the price of coal power capacity may be determined according to the principle of recovering a certain proportion of the fixed cost of coal power units. Industry insiders said that capacity cost compensation needs to determine the capacity compensation cost that can be obtained by the unit after determining parameters such as compensation capacity, marginal investment cost, and expected benefit.

The reporter learned from industry insiders that the current annual fixed cost expenditure of coal power units during the operation period of the national coal power unit is about 330 yuan per kilowatt, and if it is determined that the fixed cost proportion of capacity electricity price recovery in a certain area is 40%, the capacity cost compensation obtained should be 132 yuan per kilowatt. Due to the different levels of coal power transformation in different regions, the price level of coal power capacity and electricity is also inconsistent in different regions.

It is worth mentioning that the price of capacity electricity is not the same as the price of electricity.

Guo Lili, a utility analyst at Tianfeng Securities, explained that capacity electricity prices mainly reflect the fixed costs of power plants, which are closely related to the type of power plant, investment costs, loan repayment interest rates and depreciation methods. The electricity price mainly reflects the variable cost of the power plant, which is closely related to the cost of fuel and materials.

Taking Shandong Province as an example, in April 2020, it took the lead in proposing capacity compensation for coal-fired generator sets participating in the electricity spot market, and the compensation price was calculated according to the fixed cost accounting of the generator set, mainly including the depreciation and financial expenses of the fixed assets of the unit, and the capacity compensation was converted according to the installed capacity considering the commissioning period and the usable state of the unit.

As for who bears the cost of capacity electricity prices, the reporter learned from a number of industry insiders that the future may be dominated by industrial and commercial users. The capacity electricity fee available to coal-fired power units may be determined according to the local coal power capacity price and the rated installed capacity of the unit, and will be paid by the power grid enterprise on a monthly basis. The electricity cost of coal power capacity in various regions is included in the system operating costs, and may be shared by industrial and commercial users according to the proportion of electricity consumption every month.

Build a capacity mechanism suitable for China's electricity market

The industry consensus is that with the transformation of the role of coal power, the single power market can only guarantee the recovery of the marginal operating cost of coal power units, and cannot reflect the capacity value of coal power units as a regulated power source. In order to ensure the long-term capacity adequacy of the power system and provide effective power generation investment signals, the use of reasonable capacity compensation mechanism will be the future development direction.

The installed scale of domestic new energy continues to increase, and the proportion continues to increase, but the advantage of coal power units is that their electromechanical characteristics can contribute important support to the stability and balance of the power system, so maintaining reasonable capacity of coal power units is of great significance to ensure the reliability of power supply.

Guo Lili believes that with the continuous expansion of new energy installations, the capacity utilization rate of coal-fired power units will continue to decline, resulting in a decline in yield. If the recovery of capital costs of enterprises is not properly solved, it will have a certain impact on the investment confidence of enterprises. Therefore, it is necessary to build a capacity mechanism suitable for China's electricity market.

At present, China is establishing a five-in-one comprehensive electricity market focusing on the medium and long-term market, spot market, auxiliary service market, capacity electricity price and carbon market, providing the most basic mechanism support for China's long-term new energy transformation.

"The construction of traditional power sources is indispensable. At present, new energy has gradually become the main body of electricity, which will reduce the utilization rate and expected benefits of traditional power sources (mainly coal power), and then reduce the willingness of traditional power sources to invest. Therefore, the construction of new power systems requires the establishment of a capacity cost recovery mechanism for traditional power sources. Shenwan Hongyuan public utility analyst Zha Hao said in an interview with reporters.

Many institutions believe that the introduction of the coal power capacity electricity price policy will benefit power operators and coal power equipment manufacturers. "After the introduction of capacity electricity prices, the revenue structure of coal-fired power units will be improved, and coal power operators are expected to gradually switch from cyclical attributes to utility attributes, and their valuations are expected to increase." Cha Hao said.