[Study] Three Measures to Explore the Survival of Thermal Power Enterprises

At present, China’s power generation capacity has leapt to the second place in the world. The power shortage situation in some provinces is not due to the shortage of installed capacity, but the long-term inversion of power generation costs and on-grid tariffs, resulting in continuous losses and rising liabilities of power generation companies. The shortage of funds ultimately affected the normal power supply. In a relatively long period of time, China’s power supply structure will still be dominated by thermal power. However, the continuous loss of thermal power generation companies must arouse our great attention. It should be said that thermal power companies represented by China's central SOEs are still very political. Under the circumstances that coal prices have risen steadily and losses have continued to increase, they still clench their efforts to generate electricity, but even central SOEs cannot be trapped in an endless stream. In the midst of the loss, how long the thermal power generation enterprises can hold up, nobody knows.

At the same time, it is even more necessary to raise vigilance that the invisible hand of the market is already playing a role. The role of the project approval system and the power plan has been significantly weakened: As the thermal power plant is put into production, the investor’s investment income is not guaranteed. Major power generation companies have postponed or slowed down the projects under construction and prior work. According to the information provided by CEC, the installed capacity of thermal power production in the next two years will be reduced by 25 million kilowatts over the “Eleventh Five-Year Plan” period. In the coming years and even the entire “Twelfth Five-Year Plan” period, China’s electricity supply will have a serious impact; and in the case of sustained losses in power generation, the power generation companies’ enthusiasm for power generation will continue to decrease, and the original power supply plan will become even more hot. The best way to deal with power failures is to send power to the mountains. At present, the power companies that insist on generating electricity in the event of large losses are basically those central enterprises represented by the five major power generation groups.

The author can not help but worry that, in the long run, China's electricity supply will have problems, and ultimately it will affect the energy security of the entire country. So how can we solve these problems, where are the outlets of thermal power companies in the end? The author believes that the following aspects can be started:

The fundamental solution to this problem is the market-oriented reform of the power system. Upgrading the on-grid tariff can ease the contradiction between coal and power in the short term, but this upstream of the power generation enterprise is the market, the downstream is the planned, innate institutional weakness, and there is no change in the slightest. In the long term, the only way out for solving the many deep-seated contradictions in the development of the power industry and the system is the market-oriented reform of the power system. The goal of the reform has been clearly defined in the “Power System Reform Plan”, which is to break the monopoly, introduce competition, and improve efficiency. Reduce costs, improve electricity pricing mechanism, optimize resource allocation, promote nationwide networking, and establish a government-regulated power market system that separates government from enterprises, competes fairly, and has an orderly, healthy development.

Implement the autonomy of business operations and make them the real market players. Specifically, the government plans to gradually change the mode of power distribution, expand the power of power generation companies to independently arrange production plans, after the government issued the annual power generation expected regulation and control targets for each generating unit, give power generation companies a certain degree of autonomy, allowing power generation companies (Group After internal aggregation of the power generation indicators, they are redistributed among the power plants (units) within the company (group), that is, a round of internal optimization adjustments, and then the annual purchase and sale of electricity contracts based on the adjusted power generation plan. The adjustment does not change the electricity price of the original power generation target, which is equivalent to the generation of power generation rights trading within the power generation company (group) prior to the signing of the annual contract. In the situation where the market has not yet been established, this approach can mobilize the enthusiasm of power generation companies for energy conservation, emission reduction, and production increase.

The approved power plants are all coal-fired by planned coal to ensure the supply of coal. In view of the fact that China's electricity market reform cannot be achieved overnight, and even if China's electricity market construction is successful, the market is by no means a panacea, and it still needs the government's macro-control. In view of the current failure of the coal market, the chaos of the transportation market, the huge loss of thermal power generation companies, and the continuous emergency of power supply, there must be some emergency measures. It is recommended that all countries have approved the power plants, their coal power is completely planned by the state-owned coal group, and the railway transportation capacity has been given a significant tilt. Each major coal group is allocated by the state for the plan of coal-fired coal. Each year, the plan will be evaluated. Another advantage of adopting this method is that it can use economic means to effectively suppress the massive production of illegal thermal power projects.