The Coal Powered Electricity Market in China (Civil Project)

China 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 of national 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 separated operating systems, particular different in monopoly level. For better communication between them 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 National Development and Reform Commission, which is in charge of making major policies concerning development. SGCC has multiple functions, both as governmental authority and as an individual company.

The electricity power market is experiencing a significant systematic reform which has been ongoing 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 generation groups established in the scheme of organization reform. These power grid companies are responsible for electricity transmission and the power generation groups are in charge of electricity production. One purpose of this thesis is to introduce deregulated market theory in China’s electricity market.

Only when generation, transmission and distribution are opened separately, can it achieve to reduce electrical energy cost and, as a result, lower electricity price. In the process of reform, several theory problems are discussed: Competition and monopoly, 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 as well as new energy technology are stepping onto the historical stage. These factors are major reasons that the utilization efficiency for petroleum is lower than for any other energy. In order to ease the contradiction between energy supply and demand, we must minimize the share of un-renewable resources such as fossil fuels, and increase the new and renewable energy shares in the current energy structure.

In one word, the long-term objective is to establish a sustainable-developing energy system.New energy for electric power industry in China has two aspects: First, utilization of clean coal technology for electricity generation, and second, the renewable energy resource for electricity generation mainly consists of hydropower, wind power, biomass electricity generation, tidal power, and solar power generation and so on. The industry is still in its infancy and there’s still a long way to go.

The Chinese government will progressively increase the ratio of consumption of the high-quality, clean and renewable energy in the gross energy consumption from 7 percent in 2005 to 13 percent in 2020.
Source: University of Gävle
Author: Li, Jing

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