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Interpretation of the 2018 National Energy Working Conference

On December 26, 2018, the 2018 National Energy Working Conference was held in Beijing. The conference implemented the spirit of the 19 CPC National Congress and the decision and deployment of the Central Economic Working Conference, summarized the energy achievements of the CPC since the 18th CPC National Congress, analyzed the task study of energy development situation in the new era and deployed the national energy work in 2018.

First proposal of new energy security strategy to promote the three major changes

Energy Working Conference firstly defined the new national energy security strategy-four revolutions and one cooperation, that’s promoting energy consumption, supply, technological and institutional revolutions and strengthening international cooperation in all aspects to make effective use of international resources and strive to achieve energy security under open conditions.

Energy revolution is the medium- and long-term energy strategic task of our country and an important way to protect energy security. The so-called revolution and change have completely different connotations. Revolution means that it is a subversive action that overturns the old energy production, consumption and institutional modes to establish a new order.

On the basis of energy revolution, the three major changes to be realized in 2018 include: speeding up the change of energy development quality, change of energy development efficiency and change of energy development drive to promote the high-quality development of energy with all efforts. The promotion of high-quality energy development has the same meaning as the development of a high-quality economy at the Central Economic Working Conference. For energy production and consumption, it means completely changing the scale-quantity waste traditional energy production & consumption pattern and pursuing higher energy conversion efficiency, less emissions, cleaner and sustainable energy supply and more stable and affordable energy prices, as well as safer energy system.

From the perspective of energy system construction, constructing energy system is regarded as the focus of the energy work in the new era of 2018 and great efforts are made to establish a strong and powerful security guarantee system, clean low-carbon green industrial system, the superior scientific and technological innovation system, fair and orderly market operation system, scientific and accurate management and control system, sharing high-quality social service system and open win-win international cooperation system to implement the clean & low-carbon and safe & efficient requirements to all the fields and courses of energy development so as to promote our energy resources continue to make new progress in achieving high-quality development.

Focus on green development, develop wind power with a steady pace and orderly promote the PV power generation

The 19th National Congress of the Communist Party of China incorporated energy work into the green development system and proposed to establish an economic system featured with green low-carbon cycle development, strengthen the clean production industry and clean energy industry, and promote the revolution in energy production and consumption to construct a clean, low-carbon, safe and efficient energy system. Under this strategy, we will further focus on green development, make efforts to solve the problem of consumption of clean energy, and strive to promote the energy structure adjustment strategic project and determine the promotion of the clean heating for northern areas in 2018. Solving clean energy consumption will be also the important measure for energy industry to serve targeted poverty alleviation and air pollution prevention & control the two tough fights.

At present, the new energy is facing two problems, the high cost and insufficient consumption and utilization. In terms of measures to improve clean energy consumption, we start with renewable energy development and utilization mechanism, grid support, optimization of power supply structural layout, promotion of electric market-oriented reform, and improvement of the formation mechanism of renewable energy power-generation prices.

To be more specific, the quota system for renewable energy power generation is explicitly implemented; the support for trans-regional deployment of power grids is improved; the power generation priority system for renewable energy is implemented; the renewable energy power involving in market-oriented transactions is promoted; the coal power and renewable energy power development are coordinated; and the peak load adjustment ability of electric power system is enhanced; and self-generation power plants participating in renewable energy power consumption is promoted and so on.

In the adjustment of energy structure, the National Energy Administration made clear that, “steadily push forward the construction of onshore wind power projects, accelerate the development of offshore wind power and distributed wind power, promote the construction of photovoltaic power generation projects in an orderly manner, and vigorously promote the development of distributed energy.”

From the perspective of policy orientation, wind power ranks before photovoltaic power, and the development structure of onshore wind power has been turned to offshore distributed type after nearly ten years’ development, especially that distributed wind power will become the new power for the increase in installed capacity of wind power. After the explosive development in 2017, the PV power generation has its policy orientation tends to be more orderly.

Above measures are adopted in order to ultimately reduce the ratio of electricity abandoning and power rationing year by year, and basically solve the water abandoning, wind abandoning and light abandoning in the whole country by 2020. Since this year, domestic wind power, PV and hydropower consumption levels are greatly improved than that in the same period of last year. It is predicted that the waterpower utilization rate in 2017 will reach 95%, and the wind abandoning and light abandoning rates will be reduced by 6.7% and 3.8% respectively than that in the same period of last year.

From the perspective of top-down investment logic, there is no change in the orientation of our country in encouraging the grid-integrated consumption of clean energy in order to create conditions for the scale development of clean energy. Besides, development of clean energy is an important path to promote energy revolution and energy structure adjustment. We continue to be optimistic about the wind power, PV installed capacity growth, the decline in the cost of the industrial chain, technological progress, and the expansion of market-oriented transaction scale, as well as the accelerated realization of the grid parity.

Deepen the reform of power system and oil & gas system

In the next year, we will focus on the key areas and links to further deepen the power system reform, oil & gas system reform and reform of “simplifying administrative procedures, delegating powers to lower levels, combining delegation and governance, and optimizing service” to further strengthen the energy supervision and governance according to the law.

Power system reform and oil & gas system reform are the two important tasks initiated in the energy field recently. Especially for the power system reform, it has levered the traditional electric power market, changed the trading pattern of the power market and released nearly one trillion yuan of reform bonus. According to the achievements made in the reform, 22 provinces (cities) nationwide have carried out pilot projects of electric power consolidation and reform, and the transmission and distribution price reform has covered throughout the country, and 10,000 new electricity sales companies, 33 power trading centers and 8 regions’ power spot reform pilots, and nearly 2 trillion KWh market trading electricity quantity, 100 billion yuan cost reduction space and electricity-assist service market are being established.

From the perspective of supply, the power system reform is also the main path to resolve coal power capacity. The 2018 Energy Working Conference clearly put forward “vigorously solving the excess capacity of coal power”, which is obviously different from the tone set in 2017 (the key work in 2017 is “preventing overcapacity of coal power”). The change from prevention to resolving is actually making clear the fact of coal power overcapacity. The coal power’s positioning will also be changed from merely guaranteeing electric power supply into the equal stress on better guaranteeing electric power supply and providing support services to make room and provide services for the development of clean energy.