Beijing, March 1

China launched two power trading exchanges today, in line with the government’s efforts to free up electricity prices in the country, although some experts see the move as insufficient to reshape the sector.

China wants to eventually get its dominant grid operators — the State Grid Corp of China and China Southern Power Grid — to segregate their transmission and distribution businesses. It has already launched pilot reform programmes in seven provinces that allow generators to make sales deals directly with consumers.

The two new exchanges, one in the capital Beijing and the other in the southern manufacturing hub of Guangzhou, aim to ramp up cross-regional trading and the use of clean power, the National Development and Reform Commission (NDRC) said in a statement posted on its website today.

The exchanges would offer open and transparent electricity transaction services under government supervision, it said, adding that China’s two big state-owned grid operators have controlling stakes in the exchanges.

The Beijing exchange announced its first deal today, selling 9,000 gigawatt hours (GWh) of power to 30 users in Shangdong province, according to a company press release.

The new exchanges, which are taking over the existing long-term bulk trade contracts from the two grid companies, will, however, not be able to offer spot and futures contracts soon, said market sources with knowledge of the process.

The State Grid Corp wholly owns the Beijing exchange and China Southern Power Grid owns 66.7 per cent of the Guangzhou one, according to the NDRC statement. Details on the other shareholders were not disclosed.

The exchanges will offer licences to trading firms as well as formulate trading rules and contracts, the NDRC added.