In March 2015 the No.9 document was published by the China State Council and this began a new round of national electricity sector reforms in China. These reforms focus attention on reducing the price of electricity to industrial customers via the introduction of markets for wholesale power and the introduction of competition in the retailing of electricity. This paper focuses on how the market reforms are progressing in China’s largest province: Guangdong. It builds on our earlier paper on Chinese power market reform (Pollitt et al., 2017). This paper aims to assess progress with reform, and what Guangdong is learning about how electricity market models need to be adapted for its own particular circumstances. We pay close attention to the international experiences of electricity market reform documented in Joskow (2008) and the detailed features of well-designed wholesale electricity product markets discussed in Stoft (2002). The paper highlights what the lessons from the market pilot experiences in Guangdong are for both the province itself and for the rest of China. The paper draws on the experience of Chinese stakeholders, to identify what are the key problems to be overcome in bringing about a successful electricity reform transition in the World’s most significant electricity system. The paper offers some recommendations for next steps in the reform process at the provincial level and is intended to be a positive contribution to on-going debates about the detailed implementation of electricity sector reform in China and to be a platform for future discussion and informed input on the appropriateness of international reform experience in the Chinese context. The rest of the paper is organized in 5 sections. In Section 2, we begin with a discussion of the background to the reforms in Guangdong, including a discussion of the characteristics of the power system in Guangdong. Section 3 discusses how the power market pilot actually works in Guangdong and whether the current market design is in line with power markets we see elsewhere. Section 4 explores the extent to which power market reform has brought new players into the electricity system in Guangdong. Section 5 considers the effects of the reform on the operational and investment decisions of firms in the sector. In sections 3 to 5 we aim to provide some international context, as background to our analysis of the reform effects observed to date. Section 6 offers some points for improvement in the light of the existing market design and its observed effects.
展开▼
