The National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) have issued a notice on the establishment of a sound market price mechanism for auxiliary services of electricity, the full text of which is set out below:
National Development and Reform Commission National Energy Administration on
Notice on the Establishment of a Sound Market Price Mechanism for Electricity Auxiliary Services
NDRC Price [2024] No. 196
Provinces, autonomous regions, municipalities directly under the Central Government, Xinjiang Production and Construction Corps Development and Reform Commission, Energy Bureau, the National Energy Administration of the dispatching agencies, the State Grid Corporation, China Southern Power Grid Company Limited, Inner Mongolia Electric Power (Group) Limited Liability Company, China National Nuclear Corporation, China Huaneng Group Company Limited, China Datang Group Company Limited, China Huadian Corporation Limited, China Power Investment Corporation. Ltd., China Yangtze River Three Gorges Group Co., Ltd., State Energy Investment Group Co., Ltd., China Development and Investment Group Co:
The power auxiliary service market is an important part of the power market system. In recent years, various places have promoted the construction of the power auxiliary service market, and established the market mechanism for auxiliary services such as peak shifting, frequency shifting and standby, which has played a positive role in guaranteeing the quality of electricity and the safe and stable operation of the power system, and promoting the consumption of new energy. In order to implement the CPC Central Committee and the State Council on deepening the power system reform to accelerate the construction of a new type of power system decision-making and deployment, to further improve the power price formation mechanism, enhance the integrated regulation of the power system, promote clean energy consumption and green low-carbon transition, is to establish and improve the power auxiliary services market price mechanism notice as follows.
I. General ideas
Adapting to the development needs of the new electric power system, and continuously promoting the construction of the electric power auxiliary service market. Strengthen the integration of the power auxiliary service market with the medium- and long-term market and the spot market, scientifically determine the market demand for auxiliary services, reasonably set up the varieties of paid auxiliary services, and standardize the pricing of auxiliary services and other market rules. In accordance with the general principle of "who serves, who profits, who benefits, who bears", continuously improve the price formation mechanism of auxiliary services, promote the standardized and orderly conduction and sharing of auxiliary service costs, and fully mobilize the flexibility to regulate the active participation of resources in the system regulation initiative. Strengthening policy synergies and standardizing the management mechanism for the price of auxiliary services.
II. Optimizing the trading and pricing mechanism for peaking auxiliary services
(i) Improve the peaking market trading mechanism. Electricity spot market continuous operation of the region, improve the spot market rules, appropriate relaxation of the market price limit, guide the realization of the peak function, peak and peak, peak capacity and other similar functions of the market no longer run. Electricity spot market is not in continuous operation in the region, in principle, wind power, photovoltaic generating units are not as the main peak service provider, the study in due course to promote the participation of hydropower units in the paid peak, other units in the spot market is not in operation during the rules of independent declaration of sub-times of power and price, through the market competition to determine the price of the clearing and the winning peak power. Transactions such as regional peaking and regional standby where there is an exchange of electric energy shall be converted into electric energy transactions in a timely manner.
(ii) Reasonably determine the price ceiling for peaking services. Each region will integrate the peak demand, the cost of regulating resources and new energy consumption and other factors, in accordance with the principle that the cost of consumption of new energy projects is not higher than the value of power generation, to reasonably determine the price ceiling for peaking services, and the price ceiling for peaking services will, in principle, be no higher than the feed-in tariffs of local level-price new energy projects.
III. Sound trading and pricing mechanisms for FM auxiliary services
(c) Regulating the trading mechanism of the FM market. In principle, the FM market adopts a single-system price mechanism based on FM mileage. Each unit independently declares its time-sharing FM capacity and price in accordance with the rules, and determines the clearing price and winning FM capacity through market competition. The FM cost is calculated on the basis of the product of the clearing price, FM mileage and performance factor.
(d) Rationalizing the price ceiling for FM services. FM performance coefficient is determined by the product or weighted average of the three sub-parameters of regulation rate, regulation accuracy and response time, and the sub-parameters are converted to the design parameters corresponding to the local optimal performance of the coal power unit hosts (excluding the fire and storage joint units) as a benchmark. In principle, the maximum performance coefficient shall not exceed 2, and the upper limit of the FM mileage clearing price shall not exceed RMB 0.015 per kW.
IV. Improving the trading and pricing mechanism for standby auxiliary services
(v) Regulating the trading mechanism of the standby market. In principle, the standby market adopts a single-system price mechanism based on the winning capacity and time. Standby capacity demand is determined by the power dispatching organization according to the system security and economic requirements and the actual situation, and each unit declares its standby capacity and price in accordance with the rules, and the clearing price, winning capacity and time are determined through market competition. Standby costs are calculated on the basis of the product of the clearing price, the winning capacity and the winning time; if the actual standby capacity is lower than the winning capacity, the settlement is based on the actual standby capacity.
(f) Rationalizing the price ceiling for standby services. Taking into account the opportunity cost of providing standby services (losses incurred as a result of reserving standby capacity and not generating electricity) and other factors, the price ceiling for standby services should be reasonably determined, and in principle, the price ceiling for standby services should not exceed the ceiling of the market price of the local electric energy.
V. Regulating the price transmission of ancillary services
(vii) Reasonably determine the demand for auxiliary services. Each region should take the goal of ensuring the safe and stable operation of the electric power system, and determine the demand for auxiliary services through scientific calculations in accordance with the principle of standardization and transparency. May be combined with the local reality to explore the development of climbing and other auxiliary services mechanism, through market competition to determine the price of clearing, the winning unit and the winning capacity, and rationalize the arrangement of price ceilings. No ex post adjustment of the settlement formula and other methods shall be used to determine the scale of auxiliary service costs and price standards. Grid enterprises shall strengthen refined management and improve the level of economic dispatch.
(viii) Improving the transmission mechanism for auxiliary service costs. Each region shall standardize the management of auxiliary service costs, and the auxiliary service costs borne by the user side shall be the losses brought about by the failure to generate electricity due to the provision of auxiliary services that cannot be compensated by the electric energy market. In regions where the electricity spot market is not in continuous operation, in principle, no auxiliary service costs will be channeled to the user side. In areas where the electricity spot market is in continuous operation, the cost of FM and standby auxiliary services in line with the above requirements (excluding the cost of electricity generated in the process of providing auxiliary services) shall, in principle, be shared by the user's electricity consumption and feed-in tariffs not participating in the trading of the electricity energy market, and the proportion of the share shall be determined by the competent price department at the provincial level. Other auxiliary service costs to be borne by the operating entity shall be reported for approval in accordance with the procedures.
(ix) Standardizing the settlement of auxiliary service costs. The auxiliary service costs borne by the user is included in the system operating costs, with the settlement of electricity charges, electricity spot market continuous operation of the region using the "day-clearing and month-settlement" mode. Compensation for auxiliary services of all varieties, apportionment, assessment costs should be calculated separately and shown separately in the settlement statement.
VI. Strengthening policy support
(j) Promoting fair participation in the auxiliary services market by all types of business entities. When determining the access conditions for participation in the auxiliary services market in accordance with the relevant national regulations, each region shall implement fair access and shall not designate specific subjects or make discriminatory provisions for specific subjects. Operating entities that have been granted capacity tariffs shall participate in the auxiliary services market offer. For business entities that have the status of both power generation and power consumption, they shall participate in the auxiliary service market as power generation entities and power consumption entities respectively when discharging and charging (using) electricity, and shall be equally subject to various types of assessment.
(xi) Strengthening the integration of the auxiliary services market with the medium- and long-term market and the spot market. Each region should coordinate the auxiliary service market and the medium- and long-term market, spot market rule-making, accelerate the construction of the auxiliary service market, and realize the standardized and efficient operation of the auxiliary service market such as frequency adjustment and standby as soon as possible, so as to satisfy the system security needs of the new energy large-scale grid-connection. In areas where the spot market operates continuously, promote the joint clearing of the auxiliary service market and the spot market. Electricity generated in the course of providing auxiliary services shall be settled in accordance with spot market prices or medium- and long-term trading rules.
(xii) Improve the management mechanism of auxiliary service prices. The National Development and Reform Commission, in conjunction with the National Energy Board, will strengthen the top-level design and work guidance, and formulate policies related to the price of auxiliary services; the market rules for auxiliary electric power services will be formulated separately by the National Energy Board in conjunction with the National Development and Reform Commission. National Energy Board sent agencies in conjunction with the provincial price authorities in accordance with the relevant provisions of the State, put forward the jurisdiction of auxiliary services varieties, demand-setting mechanism, price mechanism, market price limit standards, cost diversion, such as the implementation of the program, consulting the local energy, power operation and other departments, reported to the National Energy Board, the National Development and Reform Commission agreed to the implementation of the program.
All localities shall systematically sort out the operation of the auxiliary service market and charges against the requirements of this notice, urgently improve the auxiliary service pricing policy and trading rules, etc., and re-specify the auxiliary service pricing mechanism and level in accordance with the procedures within six months after the issuance of this notice.
(xiii) Strengthen market monitoring and supervision and inspection. Each region should strengthen the power auxiliary service market operation and price mechanism tracking and monitoring, timely assessment of auxiliary service funds, policy implementation, etc.; strengthen the interpretation of the policy, to help the main business to better understand and implement. Grid enterprises in various regions will regularly report the prices, fees, key parameters of pricing, benefits and sharing of various types of subjects in paid auxiliary service transactions to the National Development and Reform Commission (Price Division), the National Energy Administration (Market Supervision Division), as well as to the local NEA dispatching agencies and provincial price authorities, and synchronize their disclosure to the relevant business subjects. Provincial price authorities should strengthen the management of electricity prices, do a good job of measuring the price of auxiliary services, impact analysis and other work and timely report. The National Development and Reform Commission, together with the National Energy Board and other departments, will strengthen market supervision and inspection, promptly correct and standardize auxiliary service price policies and trading rules that do not comply with the relevant national regulations, etc., and supervise and guide localities to improve the mechanism and promote the reasonable formation of auxiliary service prices.
This notice shall be effective as of March 1, 2024, and the provisions of this notice shall prevail in the event of any inconsistency between the relevant provisions of the current policy and this notice.
PRC National Development and Reform Commission
National Energy Administration
February 7, 2024
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