Competition in the electricity market in South China

22 November 2005

Beijing, 22 Nov – The electricity network in South China took an important step Monday in moving towards a market economy, thus becoming the third regional electricity network to introduce a higher level of industrial competition, China’s State Electricity Regulator (SERC) said in a press release.

The electricity networks in the East and Northeast regions of China have already become more open to competition.

Differently to the previously government-controlled electricity distribution system, electricity producers and distributors will now try to obtain or sell their electricity at more competitive prices by signing short and long term contracts under the terms of the new market mechanisms.

Initially the amount of electricity exchanged in this way will be very small in relation to the total installed capacity of the South China region, which includes the provinces of Guangdong, Yunnan, Guizhou and the autonomous region of Guangxi.

Next year Hainan island is expected to be linked to the main electricity network in the south of the country and at that time will also be part of a competitive market, the SERC said.

At the moment just 14 coal-fired plants are part of this market system, representing 17% of 79.6 GW (gigawatts) of installed capacity in South China.

The four provincial distribution companies will now negotiate with the 14 producers in order to reach an agreement, the SERC added in its press release.

At a press conference in Canton, Shi Yubo, the SERC Vice President added that this measure will have a profound effect on the introduction of reforms to set up a market economy in the country’s electricity industry. (macauhub)