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China’s power crisis prompts Beijing to liberalise electricity pricing
- China says electricity generated from coal will be fully liberalised and industrial and commercial users will buy power at market prices
- The electricity pricing reforms are Beijing’s latest attempt to tackle recent electricity shortages that have crippled industrial output
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China’s top economic planning agency said on Tuesday it would liberalise pricing in the state-controlled power market to help resolve an electricity crisis that has caused rationing across more than half the country and threatens to weigh on economic growth.
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Under the reform, industrial and commercial users will buy electricity at market prices and a direct power purchasing scheme that keeps costs artificially low for big users will be abolished, the National Development and Reform Commission (NDRC) said.
In addition, the state planner said all electricity produced by coal-fired power will be sold via the market, up from 70 per cent. It gave no indication when either of the changes would take effect.
The reforms are Beijing’s latest attempt to tackle widespread power shortages that have crippled industrial output and sparked debate about the effectiveness of the nation’s centrally-controlled electricity sector.
This is a very important reform for China’s power system
Energy experts hailed the measures as significant changes that will bring more transparency to electricity pricing and alleviate operating difficulties for coal-fired power companies.
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