Reforming the Chinese Electricity Supply Sector: Lessons from Global Experience PDF
Preview Reforming the Chinese Electricity Supply Sector: Lessons from Global Experience
Michael G. Pollitt Reforming the Chinese Electricity Supply Sector Lessons from Global Experience Reforming the Chinese Electricity Supply Sector Michael G. Pollitt Reforming the Chinese Electricity Supply Sector Lessons from Global Experience Michael G. Pollitt Judge Business School University of Cambridge Cambridge, UK ISBN 978-3-030-39461-5 ISBN 978-3-030-39462-2 (eBook) https://doi.org/10.1007/978-3-030-39462-2 © The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer Nature Switzerland AG 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and trans- mission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG. The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland To Christian Romig, formerly of the British Embassy in Beijing, for inspiring my interest in Chinese power market reform. Without Christian’s enthusiasm, energy and charm this book would never have been written. Preface The Chinese electricity sector is the largest in the world, covering over 25% of world electricity supply and responsible for perhaps 9% of global greenhouse gas emissions (by 2016). China’s electricity companies such as the State Grid Company of China and China Southern Grid are among the world’s largest companies. Many other countries, including the UK, liberalised their electricity systems in the 1990s, creating competitive wholesale and retail electricity markets and separate incentive-regulated electricity grids. This has resulted in electricity systems very different from the pre-liberalisation era. China has only slowly moved towards reforming its electricity sector, but in recent years it has begun an ambi- tious new round of reforms aimed at introducing competitive wholesale electricity markets and incentive regulation for its power grids. This was initiated in March 2015 by the No. 9 document on ‘Deepening Reform of the Power Sector’ published by the China State Council with the aim of offering lower prices to China’s industrial electricity customers. This book seeks to provide lessons for China’s reforms from international vii viii Preface experience, combining a detailed review of reform lessons from around the world, a specific application to China and a particular focus on how exactly the industrial price of electricity is determined in a liberalised power system. The book draws on the outputs of a three-year research programme based on the interactions of Chinese and British power market professionals, facilitated by the British Embassy in Beijing. Cambridge, UK Michael G. Pollitt Acknowledgements I owe many debts of gratitude for the writing of this book. The British Embassy in Beijing has supported this project consistently since October 2015 when I was invited to participate in the UK-China Energy Dialogue around the time of the visit of President Xi to London. Since then the Embassy, together with British Consulates in Guangzhou and Shanghai, has hosted me on eight visits to China and introduced me to a wide range of different stakeholders from across the Chinese electric- ity supply sector. I particularly wish to thank Christian Romig, then of the British Embassy in Beijing, to whom this book is dedicated. It was through Christian that I have been inspired to spend four years (and counting) working on Chinese power market reform. It was as Christian and I travelled in an Embassy car between meetings in Beijing that I felt personally challenged—by the Lord himself (?)—to take Chinese power market reform seriously! I am a huge admirer of the dedicated staff of the UK Foreign Office in China and would wish to thank the many officials who worked to make my visits to China such enjoyable and productive experiences. The British Embassy in Beijing also generously arranged for the translation of the academic paper versions of Chaps. 2, 3 and 4 into Chinese and co-sponsored a joint conference with the University of Cambridge around Chap. 2 in May 2017. ix x Acknowledgements I readily acknowledge my co-authors on the individual chapters: Chung-Han Yang, Hao Chen and Lewis Dale. Chung-Han and Hao- Chen helped me access the many Chinese papers on power market reform and provided me with numerous insights into the way that the reforms are viewed in China, as well as providing superb support for the writing of Chaps. 2 and 3. Chung-Han was a very agreeable companion on my first trip to Guangdong. Both were exemplary members of the Energy Policy Research Group (EPRG) during their time in Cambridge. Lewis Dale has supported this project from the start, travelling to China twice and providing me with first-hand insights into the UK’s own elec- tricity reform. Lewis has also answered many of the questions we have received over the course of the project about power market reform from Chinese stakeholders and was always willing to meet Chinese power sec- tor visitors to the UK. Lewis is a co-author of Chap. 4. In addition, I would wish to thank the many Chinese stakeholders who have met me over the last five years to talk about power market reform. The topic is huge and without them I would not have been able to begin to get a sense of what the issues were for China. I would wish to thank all those stakeholders I have met in Beijing, Guangdong, Yunnan, Fujian, Zhejiang and Jiangsu for their time and generosity in answering my questions and explaining their insights to me. Thanks go to Professor Yongsheng Feng of the Chinese Academy of Social Sciences. Yongsheng oversaw the publication of academic paper versions of Chaps. 2, 3 and 4 in one of the Academy’s journals, Financial Minds, providing many judi- cious editing comments and much encouragement on the papers in the process. I would also wish to thank Rachel Chen, Bai-Chen Xie, Jun Xu and Geoffroy Dolphin for their help with the editing of the book manuscript. Finally, I should acknowledge all of the support I have received from my own university. The book is an output of the In Search of ‘Good’ Energy Policy grand challenge project of Energy@Cambridge (which has now become Energy Transitions@Cambridge). I would wish to thank Professor David Newbery of the EPRG, Dr Isabelle de Wouters and Dr Acknowledgements xi Shafiq Ahmed of Energy@Cambridge in particular for their support for this work. I am happy to acknowledge funding from the ESRC Global Challenges Research Fund (which supported the work behind Chap. 2), an ESRC Impact Acceleration Award (for Chap. 3) and funding from the Judge Business School impact fund (for Chap. 4). Finally, I also wish to thank my family—Yvonne, Daisy and Sammy—for all of their support and willingness to put up with my trips to China!
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