How far is the road for renewable energy to participate in market trading

On the one hand, there are many kinds of policies involving renewable energy consumption and participation in the market, including renewable energy subsidy mechanism, renewable energy consumption responsibility weight mechanism, etc., and the coordination between policies needs to be further strengthened. On the other hand, renewable energy has high volatility and relatively low prediction accuracy, and there is a certain risk in participating in market trading, which needs to be considered in the design of market rules, taking into account economy and system security.

Recently, the Guangdong Provincial Energy Bureau issued the "Letter on seeking opinions on the implementation plan of renewable energy electricity Consumption Protection in Guangdong Province and the implementation plan of renewable energy electricity trading" (hereinafter referred to as the "Opinions"), clarifying the weight and distribution of renewable energy consumption responsibility, market management mechanism, assessment requirements and other detailed trading plans. Following the opening of the domestic renewable energy power market trading in May this year, the road to the marketization of renewable energy is the next city.

With the gradual deepening of the reform of the power system, wind power and photovoltaic participation in the power market has been the trend of The Times, but the road to marketization is still a long way to go.

Test the water market trading

During the "13th Five-Year Plan" period, China's wind power and photovoltaic power generation industry rapidly achieved large-scale development and made remarkable achievements. By the end of 2019, China's cumulative installed capacity of wind power has ranked first in the world for nine consecutive years, and photovoltaic installed capacity has ranked first in the world for four consecutive years, forming a complete and internationally competitive wind power and photovoltaic industry chain.

Many years ago, China began to brew renewable energy quota system at the policy level, that is, to make mandatory provisions on the market share of renewable energy power generation in the form of law. In May 2019, the National Development and Reform Commission and the National Energy Administration issued the Notice on Establishing and Improving the Renewable Energy Electricity Consumption Guarantee Mechanism.

"Full guarantee acquisition" means that as long as the renewable energy project meets the regulations, the power grid enterprise must be all absorbed. In the early stage of the development of renewable energy, the market is not mature enough, mainly by government funds and policy support.

Driven by the high subsidy policy, China has also encountered the common challenge encountered by countries in the world to develop renewable energy - the sharp expansion of the subsidy funding gap and path dependence. In this context, the promotion of photovoltaic and wind power parity online projects, as well as encouraging renewable energy generation to participate in market competition has become one of the development directions of the market.

At the end of last year, the National Development and Reform Commission and the National Energy Administration issued the "Regulation Measures for the Full Guarantee Acquisition of renewable energy electricity by power grid Enterprises (Revised) (Draft for Comment)", which divided the renewable energy generation on-grid electricity into two parts: priority power generation and market trading power.

On April 15, the National Energy Administration issued the Notice on Matters related to the preparation of the 14th Five-Year Plan for the development of renewable energy. "Notice" said that in the "14th Five-Year Plan" preparation, will highlight the market-oriented low-cost priority development of renewable energy strategy.

Hebei is the first to test the market trading of renewable energy. According to the news released by the State Grid in May, its Hebei Power reached a cooperation agreement with the Zhangjiakou City government, relying on the power trading platform, power users release the next month's demand electricity and listed electricity prices every month, and renewable energy power generation enterprises voluntarily participate.

Large-scale participation will be difficult

The ideal is "full", but the reality is a little "bone". A person in charge of a wind power company who did not want to be named told reporters: "The enthusiasm of 'renewable energy power generation companies to participate voluntarily' is not high." Participation in the electricity market is no longer 'affordable Internet access', but 'low-cost Internet access'. "Affordable access to the Internet is difficult to implement, let alone large-scale participation in the electricity market."

The road of renewable energy participation in market trading is not "smooth", in addition to the subjective will of enterprises, objective conditions also have limitations. Ma Li, deputy chief engineer of the State Grid Energy Research Institute, told reporters: "On the one hand, there are more types of policies involving renewable energy consumption and participation in the market, including renewable energy subsidy mechanisms, renewable energy consumption responsibility weight mechanisms, etc., and the coordination between policies needs to be further strengthened." On the other hand, renewable energy has high volatility and relatively low prediction accuracy, and there is a certain risk in participating in market trading, which needs to be considered in the design of market rules, taking into account economy and system security."

In terms of the current development of renewable energy in China, what are the difficulties in participating in market-oriented trading? Ma Li said: "At present, there are big differences in the way of new energy participation in the spot market in various provinces, Gansu adopts the 'quantity quote' method, and Shanxi adopts the 'quantity do not quote' method. Zhejiang, Shandong, Sichuan and Fujian adopt a fully guaranteed acquisition approach and do not participate in the spot market. For regions that have not yet approved the number of guaranteed acquisition hours, it is recommended to reasonably determine the number of new energy guaranteed acquisition hours, and the excess part will enter the market."

Zhejiang, Shandong, Fujian as power spot pilot areas, why the use of full protection of the acquisition method?

Zhao Xiaodong, head of Beijing Ronghe Shengyuan Power Sale Co., LTD., said publicly that in most power trading markets, especially in provinces and regions with high power loads such as Guangdong and Zhejiang, they are constrained by multiple factors such as the relatively high proportion of thermal power, the tension between provincial and regional channels caused by power supply and demand, and the safe operation of the power system. Although the energy authorities have introduced relevant policies to support renewable energy power trading, from the implementation level, whether it is distributed "wall sales" or centralized direct trading, it is still difficult for electricity sales companies or large power users to directly purchase renewable energy power through market-oriented trading. Renewable energy consumption is still achieved through "grid to grid" procurement transactions by grid companies.

Market trading is the trend of The Times

So, is there a contradiction between market-based trading of renewable energy and guaranteed acquisition?

An expert who did not want to be named said: "In the early stage of the development of renewable energy such as wind power and photovoltaic, the guarantee acquisition policy effectively guaranteed the reasonable income of the project through the quantity guarantee price." As the scale of development continues to expand rapidly, the total amount of renewable energy consumption and the external environment have undergone great changes, and corresponding policies also need to make appropriate adjustments."

"Renewable energy market transactions mainly consider under the premise of ensuring the reasonable income level of the project, more encouragement to promote the consumption of renewable energy through market-oriented ways, such as by participating in the spot market to ensure the priority clearance and consumption of clean energy, in essence, it is also to ensure the effective use of renewable energy and the reasonable income of the project. It is consistent with the purpose of the protected acquisition policy." The experts said.

He Aimin, senior economist of the Independent Power System Operating Company of Ontario, Canada, agreed with the above views: "In foreign countries, 'guaranteed acquisition' is a common policy in the early development of renewable energy, and it has been basically abandoned. At present, competitive bidding is more popular in foreign countries, and the company with a lower bid price wins the bid. The advantage of introducing competitive bidding is that it can reduce the purchase price of renewable energy.

Another industry insider who has studied electricity reform for a long time said: "There is no contradiction in the quantity of the two, the price is differentiated, the load is close to the peak hour output, and the income of renewable energy is greatly increased, and the vice versa." This year is the '14th Five-Year Plan' layout of the year, design to adapt to the development of renewable energy generation capacity cost recovery mechanism, to further deepen the reform of the power system is of great significance."