Chinese Government Plans to Invest 2 Trillion RMB to Accelerate Power Grid Construction and Redevelopment in the Next Five Years

Chinese Energy Bureau published <The Action Plan for Power Grid Construction and Redevelopment (2015-2020)> (here in after referred to as The Action Plan) on August 31st. The Action Plan explicitly indicated that from 2015 to 2020, investment on Power Grid establishment and redevelopment will be no less than 2 trillion RMB, during which, investment in 2015 will be over 300 billion RMB.

It is estimated that by the end of 2020, high voltage power grid substation capacity will reach 2.1 billion kVA, with total 1010,000 km transmission line coverage, medium voltage public power distribution capacity will reach 1.15 billion kVA and with total 4040,000 km transmission line coverage. Urban power supply reliability will reach 99.99% in 5 years.

China has been increasing investment in domestic power grid construction in recent years and achieved marvelous progress, yet electricity consumption levels in China is still inferior compared to advanced international standard, urban-rural power supply imbalances still exists and quality of power supply leaves much to improve.

In order for high power supply reliability to come into practice, The Action Plan explicitly indicates to continue to perfect electricity charge policy, combining reform in power transmission and distribution charge, include investment of power grid construction and redevelopment into valid assets of power grid companies, add operational cost to allowable cost, thus to ensure reasonable income through electricity charge recycling.

In the mean time attract social capital to power grid investment, start up pilot projects and gradually open up incremental power supply investment to qualified market entities to exert power of the market.

Moreover, the government will provide support for multiple ways of power purchase and vending, encourage power grid companies that satisfy national admittance qualifications to establish power vending subsidiaries, through which these companies are capable of purchasing power from the power market via various means and vend to end-users after fulfilling obligations of undertaking power funds, political cross-subsidies, general services and its social responsibilities. The Chinese government is devoted to establish an orderly market pattern with multiple entities through innovative service, reinforced management and low cost.