China to liberalise coal-fired power pricing to tackle energy crisis

(Reuters, 12 Oct 2021) China will further liberalise pricing for coal-fired electricity and force industrial and commercial power consumers to buy from the market in its latest attempt to deal with an energy crisis that could cripple its economy this winter and into next year.

The National Development and Reform Commission said in a statement on Tuesday, that effective on Oct. 15, all electricity generated from coal-fired power will be priced via market trading, and that commercial users will have to buy direct from the market or via agents over the grid "as soon as possible".

A widening power crunch in China has forced production curbs across industries such as cement, steel and aluminium as power producers, unable to pay sky-rocketing prices for coal, cut back on output. The utilities have been unable to keep up with post-pandemic power demand, dampening China's outlook for economic growth. read more

Pushing all industrial and commercial users to the power exchanges and allowing prices to be set by the market is expected to encourage generators to increase output.

"(The pricing reform) is designed to reflect power demand and consumption, and to some extent to ease operation difficulties of power firms and encourage plants to increase power supply," said Peng Shaozong, an official with the NDRC, at a press briefing on Tuesday.

The reform, one of the boldest in a liberalising effort that has lasted decades, would allow coal-fired power plants to pass more of the cost of generating fuels on to end-users via market-driven prices for electricity.

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Reuters, 12 Oct 2021: China to liberalise coal-fired power pricing to tackle energy crisis