1. 1 Reform of Electricity Industry & Construction of Electricity Market In China Northeast East South Centre Northwest North Sitsang Taiwan Zhang Diansheng Market & Trade Dept.

2. 2 Reform of Electricity Industry & Construction of Electricity Market In China Introduction of CSG Part A : Reform of Electricity Industry in China part B : Construction of Electricity Market In China - Northeast Electricity Market - East Electricity Market - South Electricity Market Contents

3. 3 Reform of Electricity Industry & Construction of Electricity Market In China By the end of 2006 : Power supply population (million) - 230 Total asset (billion $) - 380 Sales (TWh) - 397.3 Revenue (billion $) – 284 Rank in top 500 world enterprises - 237th CHINA Covering 5 provinces : Guangdong Guangxi Yunnan Guizhou Hainan Area (km 2 ): 100 million Sales (TWh) Year

4. 4 Reform of Electricity Industry & Construction of Electricity Market In China The reform fell into 3 stages: - 1st stage : 1980s~1990s - 2nd stage : 1995~2002 - 3rd stage : from 2002 to today Part A Reform of Electricity Industry in China

5. 5 Reform of Electricity Industry & Development of Electricity Market In China 1st stage Source of funds: Central Government Power shortages Source of funds: - Central government - Local government - Foreign capital - Other capital Diversification of electricity investment

6. 6 Reform of Electricity Industry & Development of Electricity Market In China 2nd stage -1997: State Power Corporation was established -1998: Ministry of Electric Power was cancelled - The policy on the reform of electricity industry was promulgated - Bidding for dispatch was first experimented - The general scheme of the reform was begun to research. Separation of plant and grid Separation of government and enterprise

7. 7 Reform of Electricity Industry & Development of Electricity Market In China 3rd stage In 2002: - Electricity Sector Reform Project was approved. - State Power Corporation recomposed to two grid corporations, five generation companies and four assistant groups. - State Electricity Regulation Commission was set up - The construction and regulation of the Chinese power market was started Electricity Sector Reform Project was approved

8. 8 Reform of Electricity Industry & Construction of Electricity Market In China Since 2002, active progress has been achieved : - Northeast & east market : In trial operation - South market : In simulative operation - Central market : A construction scheme is completed - Northwest & north market : Construction schemes are being studied Part B Construction of Electricity Market in China

9. 9 Reform of Electricity Industry & Construction of Electricity Market In China NORTHEAST ELECTRICITY MARKET Single-buyer Whole energy competition Two-part price Bidding Demand MCP MWh ￥ /MWh Main model of trading: Mid-long-term contract trading Partial energy competition Generation right trading The direct power-purchase for large customer in the market In the future In the past

10. 10 Reform of Electricity Industry & Construction of Electricity Market In China EAST ELECTRICITY MARKET Multilateral trading Whole energy competition & CFD One-part price Yearly / monthly / day-ahead Trading monthly Bilateral trading Generation right trading In the future In the past MWh ￥ / MWh Bidding MCP Now Settlement: LMP

11. 11 Reform of Electricity Industry & Development of Electricity Market In China SOUTH ELECTRICITY MARKET Multilateral trading : provincial power grid companies & power producers Partial energy competition : 15% of all bidding units’ scheduled energy One-part price Up and down matching Yearly & monthly Bidding MWh ￥ /MWh Settlement Price upper limit Price lower limit

12. 12 Reform of Electricity Industry & Development of Electricity Market In China Policies on saving energy and cutting emissions in 2007 Energy-saving dispatching in several provinces Energy-saving dispatching will impact on the electricity market in the future Energy-saving Dispatching Renewable Hydro Nuclear Thermal Standard coal consumption per kWh of the power plant

13. 13 Reform of Electricity Industry & Development of Electricity Market In China The End THANK YOU 2007/10/15