Russian power company InterRAO said it may suspend winter electricity exports to China from this year due to losses, Russian media reported on Dec. 9. China is the world’s largest power supply country and has achieved the problem of national electricity access, so why import from abroad? And why Russian power companies are considering to stop exporting to China?
Russian power companies export 3 billion kilowatt hours of electricity to China every year at a price of only 0.26 yuan per kilowatt hour
Russian power company InterRAO reportedly buys electricity from power plants in the Far Eastern Federal District and sells it to China, paying extra for the resale of electric energy. Data show that InterRAO sold 3 billion kilowatt hours of electricity to China in 2019, earning revenues of 8.7 billion rubles (about 780 million yuan), which translates into 2.9 rubles (0.26 yuan) per kilowatt hour.
InterRAO reported to the energy market regulator that the supply of electricity to China could be significantly reduced or stopped altogether in winter; the company said in its report that the cost of power generation in Far Eastern power plants is too high and unprofitable.
InterRAO board member Alexandra Panina said that by exporting electricity, Russian consumers in the Russian Far East could save $3 billion a year in expenses, equivalent to 20-25% of export profits to consumers. She also said that regulators limit the profits of power plants to 5% of annual profits.
In order to solve the problem of losses caused by the high cost of power generation, Russian Far Eastern power plants are considering increasing the profitability of electricity exports to China, i.e., raising the price of electricity exports. The revised proposal put forward by Russian power company InterRAO shows that from 2021, including the winter season, the profit rate for exporting electricity to China will be fixed at 5% per month per year. Panina said this would ensure profitability for exporters while guaranteeing unchanged subsidies for domestic consumers.
Power plants in the Russian Far East have also expressed support for such an initiative, as they do not want to reduce their power exports due to losses. However, Russian media said overseas buyers are proposing to bring in more power suppliers as they see the risk of price hikes.
Why does China still need to import from abroad, and how does the power supply break the ice?
Some people may say, China is a big power supply country, why do we still need to import electricity from abroad? On the one hand, it may be because Russia’s electricity export prices are cheap, Russia’s electricity is only $ 0.26 a degree, this price compared to the cost of domestic power generation is more cost-effective.
On the other hand, although China is a large power producer, but there are geographical and seasonal differences in the supply of electricity, the need to import electricity to provide a supplement. In terms of geography, there is a very uneven supply and consumption of electricity in China. Electricity supply is mainly distributed in the western and northern regions, while 75% of the country’s electricity consumption is concentrated in the eastern and central regions, and it is difficult to meet the electricity demand is a key problem, which is why there is a huge project like the west-east electricity supply.
In terms of seasons, electricity consumption in the more economically developed regions is often difficult to meet during the peak summer months, for example, in summer 2019, the air conditioning load in Beijing and Shandong accounted for 45% and 31% of the maximum load on the grid, respectively. In addition, the share of hydropower in China’s power generation is over 10%, and when precipitation decreases in winter, there is a certain amount of reduction in power generation.
Due to the existence of structural contradictions of electricity, China’s electricity demand is not well met, China’s official also proposed in the work report, will further enhance the security of electricity supply capacity. At present, China mainly uses the market mechanism to guide the allocation of resources to “fill the short board”, will be energy saving and improve the efficiency of the use of resources at the end of demand to protect the electricity service.
Recent Comments