Wang Zhiwei, Chairman and Party Secretary of State Grid Shandong Electric Power Company
On November 27, 2020, the National Development and Reform Commission and the National Energy Administration designated Shandong as the only pilot province for comprehensive reform in power market construction in the country. Over the past three years, State Grid Shandong Electric Power Company has fully implemented the decisions and deployments of the Party Central Committee regarding power market reform, resolutely fulfilling the relevant work requirements of the Party Leadership Group of State Grid Corporation of China. They have tackled core issues in market construction such as the release of priority electricity consumption plans, new energy market transactions, multi-level market connections, and price formation mechanisms, developing and applying the '1+1+2' scheme system for Shandong's power market comprehensive reform pilot. On June 17, 2024, the Shandong electricity spot market officially began operation, successfully completing the comprehensive reform pilot tasks.
Accelerate the construction of a full-cycle and full-variety power market system
Establish a matching mechanism for priority generation and purchase. State Grid Shandong Electric Power will prioritize matching the generation that does not participate in power market transactions with guaranteed electricity sectors such as residential and agricultural use, while packaging the remaining portion as government-authorized contracts for subscription by all industrial and commercial customers within the province (including grid agency purchases).
Establish various market connection mechanisms. The results of inter-provincial market transactions serve as boundaries for the provincial market, supporting national energy strategies. The medium- and long-term market operates continuously by natural days, innovating continuous matching trading varieties to achieve daily rolling openings. It guides the medium- and long-term market to form time-based price signals, achieving 'hourly' connections with the spot market in trading sequences and price mechanisms, promoting the transition of medium- and long-term electricity trading to power trading.
Establish an e-commerce retail trading mechanism. Taking the lead within State Grid Corporation's system to establish a fully online operated electricity retail market under a spot model, transforming offline decentralized trading into online centralized trading, enhancing transparency in the retail market business environment, and reducing average energy costs for end-use customers.
Strongly ensure safe and reliable electricity supply
Serve electricity supply security through market mechanisms. Adhere to a cross-provincial trading strategy of 'precise forecasting, exquisite trading, taking responsibility, and strong guarantees.' With support from Beijing Power Trading Center, open up transmission paths for Northeast electricity via Gaoling DC through North China AC, achieving full power delivery of 10 million kilowatts through two DC transmission channels into Shandong for the first time. Deeply explore load-side adjustment capabilities, establish time-based price package mechanisms in the retail market, transmit wholesale market time-based price signals to end customers, helping achieve load transfers of 2 million kilowatts during evening peaks and 3.5 million kilowatts during midday valleys, equivalent to peak-shaving effects of three 600 MW coal-fired units and three pumped storage power stations.
Serve electricity supply security through pricing measures. State Grid Shandong Electric Power collaborates with government authorities to establish a capacity compensation electricity price mechanism covering effective capacity costs of coal power, new energy generation, new storage units, etc., effectively connecting with medium- and long-term and spot market price mechanisms to solve fixed cost recovery issues for generating entities and incentivize various generating entities to generate electricity during peak periods. During the summer peak period in 2023, with maximum loads exceeding 100 million kilowatts ten times and both midday and evening peak loads exceeding 100 million kilowatts simultaneously without initiating demand response measures, it fully demonstrated the decisive role of the electricity market in resource allocation.
Actively promote the construction of a new energy system
Promote direct participation of new energy generation in markets. Establish mechanisms for centralized new energy generation participation in markets and a 'dual-track' unbalanced fund allocation mechanism to adapt to high proportions of new energy generation participating in markets; promote comprehensive application of new energy generation at highway charging stations within the province; launch green electricity retail packages to normalize green electricity trading.
Broaden space for new energy consumption. Achieve independent storage and new energy co-storage entering markets; establish an independent storage market profit mechanism based on 'energy revenue + capacity compensation + leasing revenue' to fully mobilize enthusiasm for new energy co-storage participation in grid regulation. Build an auxiliary service market suitable for a new type of power system.Independently design new varieties of ramp-up auxiliary services. Establish mechanisms for virtual power plants to participate in spot trading; release virtual power plant retail packages to fully leverage market aggregation effects and further enhance power system regulation capabilities.
Provide services for market-oriented electricity trading
Proactively serve various operating entities by providing uninterrupted '365×24' hour services for market-oriented electricity trading. Launch a special action called 'Green Movement Qilu,' building a 'channel + professional' service model to achieve breakthroughs in green electricity trading from non-existence to existence. Serve government office buildings in Weihai Wendeng and Rongcheng City to achieve 100% green office operations.
Improve information disclosure management mechanisms to ensure that all types of information are disclosed timely and thoroughly. Regularly organize professional training aimed at various operating entities to enhance business capabilities.
Over more than three years, State Grid Shandong Electric Power has adhered to goal-oriented, problem-oriented, and result-oriented approaches in its comprehensive reform pilot work on power market construction. It has accumulated a series of distinctive and replicable valuable experiences, establishing a complete market structure of 'medium- and long-term + spot + retail + auxiliary services,' creating a power market system that is 'well-structured, diverse in varieties, orderly connected, stable and efficient, with satisfied participants.' State Grid Shandong Electric Power will continue to summarize experiences from comprehensive reform pilots to promote power market system construction.
