China launches power trading exchanges

Beijing is looking to boost efficiency and cleaner energy by breaking the monopoly of state-owned grids.

China has launched two power trading exchanges in Beijing and Guangzhou in a bid to drive competition in its electricity market, according to the country’s National Development and Reform Commission. 

The exchanges aim to make power transactions more transparent and effective across China's regions as well as encourage the development of cleaner energy generation. They will strive to make clean energy generated in West China available to the country's eastern coast, where energy demand is booming. 

The reform also aims to break the monopoly over power sales enjoyed by China's two main grids. Pilot programmes in seven provinces already allow generators to sell their power directly to consumers. 

The measure's eventual objective is to induce the two state-owned grid operators – the State Grid Corporation of China and China Southern Power Grid – to segregate their transmission and distribution businesses. 

The State Grid wholly owns the Beijing exchange while China Southern Power Grid owns 66.7 percent of the Guangzhou exchange, NDRC said. Information on other shareholders were not disclosed. 

The Beijing exchange has already sealed its first deal, selling 9,000GWh of power to 30 users in Shangdong province, according to a State Grid statement. About 20 percent of the traded power came from wind and solar plants in north-western China. 

The exchanges will offer licences to trading firms as well as formulate trading rule and contract, NDRC added. 

More than 250 companies have been set up to distribute electricity since China allowed private investment in its wholesale and retail power markets last year, according to reports. 

Government officials are said to be considering setting up other provincial-level trading platforms in the future.