The coal powered electricity market in China

Abstract: AbstractChina is rich in coal resources, possessing as much as 13 percent of world’s coal reserves.With a vital role in domestic economic development, coal contributes to 70 percent ofnational energy needs. China’s power industry mainly depends on thermal power plants,where the largest share of coal is consumed.At present in China, generating and transmitting of electricity are completely 2 separatedoperating systems, particular different in monopoly level. For better communication betweenthem and more effective and smooth working procedures, the State Grid Corporation of China(hereinafter referred to as SGCC) was established in 2002, under supervision of NationalDevelopment and Reform Commission, which is in charge of making major policiesconcerning development. SGCC has multiple functions, both as governmental authority andas an individual company.The electricity power market is experiencing a significant systematic reform which has beenongoing for over 10 years. Its main goal is to ''Break monopoly, and introduce competition''.In this reform, there are two big power grid companies and five major electricity generationgroups established in the scheme of organization reform. These power grid companies areresponsible for electricity transmission and the power generation groups are in charge ofelectricity production. One purpose of this thesis is to introduce deregulated market theory inChina’s electricity market. Only when generation, transmission and distribution are openedseparately, can it achieve to reduce electrical energy cost and, as a result, lower electricityprice. In the process of reform, several theory problems are discussed: Competition andmonopoly, bidding for sale, the electric power system's big cycle and minor cycle.Petroleum is regarded as a non-renewable resource and will be used up someday. Meanwhile,oil prices surge gradually, and with human society's full-scale development, new demand aswell as new energy technology are stepping onto the historical stage. These factors are majorreasons that the utilization efficiency for petroleum is lower than for any other energy. Inorder to ease the contradiction between energy supply and demand, we must minimize theshare of un-renewable resources such as fossil fuels, and increase the new and renewableenergy shares in the current energy structure. In one word, the long-term objective is toestablish a sustainable-developing energy system.New energy for electric power industry in China has two aspects: First, utilization of cleancoal technology for electricity generation, and second, the renewable energy resource forelectricity generation mainly consists of hydropower, wind power, biomass electricitygeneration, tidal power, and solar power generation and so on. The industry is still in itsinfancy and there’s still a long way to go. The Chinese government will progressivelyincrease the ratio of consumption of the high-quality, clean and renewable energy in the grossenergy consumption from 7 percent in 2005 to 13 percent in 2020.