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What effect has the 2015 power market reform had on power prices in China? Evidence from Guangdong and Zhejiang

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  • Xie, B-C.
  • Xu, J.
  • Pollitt, M.

Abstract

This paper presents an analysis of the impact of the recent power market reform process in China – following the No.9 Document of March 2015 – on the industrial price of electricity. We do this by picking a typical power price for a medium sized industrial customer in two of China’s leading reform provinces: Guangdong and Zhejiang. We find that power market reform, which is characterised by the introduction of wholesale electricity markets, has substantially reduced prices. Our detailed analysis shows that these price falls have come from a number of different sources: falls in the prices paid to generators, reductions in grid charges and falls in government taxes and additional charges. We show that the regulated price falls by 26.4% in Guangdong and by 26.9% in Zhejiang. The market price falls even further by 27.7% in Guangdong and 30.4% in Zhejiang. We conclude that while the impact of the power markets is significant, the associated changes to network charges and other government determined components of the price are more significant.

Suggested Citation

  • Xie, B-C. & Xu, J. & Pollitt, M., 2020. "What effect has the 2015 power market reform had on power prices in China? Evidence from Guangdong and Zhejiang," Cambridge Working Papers in Economics 2043, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2043
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    References listed on IDEAS

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    1. Pollitt, M. & Yang, C-H. & Chen, H., 2017. "Reforming the Chinese Electricity Supply Sector: Lessons from International Experience," Cambridge Working Papers in Economics 1713, Faculty of Economics, University of Cambridge.
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    Cited by:

    1. Michael Pollitt, 2021. "Measuring the Impact of Electricity Market Reform in a Chinese Context," Working Papers EPRG2111, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    2. Chen, Hao & Cui, Jian & Song, Feng & Jiang, Zhigao, 2022. "Evaluating the impacts of reforming and integrating China's electricity sector," Energy Economics, Elsevier, vol. 108(C).

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    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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