Table Of ContentMichael G. Pollitt
Reforming the
Chinese Electricity
Supply Sector
Lessons from
Global Experience
Reforming the Chinese Electricity Supply Sector
Michael G. Pollitt
Reforming the
Chinese Electricity
Supply Sector
Lessons from Global Experience
Michael G. Pollitt
Judge Business School
University of Cambridge
Cambridge, UK
ISBN 978-3-030-39461-5 ISBN 978-3-030-39462-2 (eBook)
https://doi.org/10.1007/978-3-030-39462-2
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To Christian Romig, formerly of the British Embassy in Beijing, for
inspiring my interest in Chinese power market reform. Without Christian’s
enthusiasm, energy and charm this book would never have been written.
Preface
The Chinese electricity sector is the largest in the world, covering over
25% of world electricity supply and responsible for perhaps 9% of global
greenhouse gas emissions (by 2016). China’s electricity companies such
as the State Grid Company of China and China Southern Grid are among
the world’s largest companies. Many other countries, including the UK,
liberalised their electricity systems in the 1990s, creating competitive
wholesale and retail electricity markets and separate incentive-regulated
electricity grids. This has resulted in electricity systems very different
from the pre-liberalisation era. China has only slowly moved towards
reforming its electricity sector, but in recent years it has begun an ambi-
tious new round of reforms aimed at introducing competitive wholesale
electricity markets and incentive regulation for its power grids. This was
initiated in March 2015 by the No. 9 document on ‘Deepening Reform
of the Power Sector’ published by the China State Council with the aim
of offering lower prices to China’s industrial electricity customers. This
book seeks to provide lessons for China’s reforms from international
vii
viii Preface
experience, combining a detailed review of reform lessons from around
the world, a specific application to China and a particular focus on how
exactly the industrial price of electricity is determined in a liberalised
power system. The book draws on the outputs of a three-year research
programme based on the interactions of Chinese and British power
market professionals, facilitated by the British Embassy in Beijing.
Cambridge, UK Michael G. Pollitt
Acknowledgements
I owe many debts of gratitude for the writing of this book.
The British Embassy in Beijing has supported this project consistently
since October 2015 when I was invited to participate in the UK-China
Energy Dialogue around the time of the visit of President Xi to London.
Since then the Embassy, together with British Consulates in Guangzhou
and Shanghai, has hosted me on eight visits to China and introduced me
to a wide range of different stakeholders from across the Chinese electric-
ity supply sector. I particularly wish to thank Christian Romig, then of
the British Embassy in Beijing, to whom this book is dedicated. It was
through Christian that I have been inspired to spend four years (and
counting) working on Chinese power market reform. It was as Christian
and I travelled in an Embassy car between meetings in Beijing that I felt
personally challenged—by the Lord himself (?)—to take Chinese power
market reform seriously! I am a huge admirer of the dedicated staff of the
UK Foreign Office in China and would wish to thank the many officials
who worked to make my visits to China such enjoyable and productive
experiences. The British Embassy in Beijing also generously arranged for
the translation of the academic paper versions of Chaps. 2, 3 and 4 into
Chinese and co-sponsored a joint conference with the University of
Cambridge around Chap. 2 in May 2017.
ix
x Acknowledgements
I readily acknowledge my co-authors on the individual chapters:
Chung-Han Yang, Hao Chen and Lewis Dale. Chung-Han and Hao-
Chen helped me access the many Chinese papers on power market reform
and provided me with numerous insights into the way that the reforms
are viewed in China, as well as providing superb support for the writing
of Chaps. 2 and 3. Chung-Han was a very agreeable companion on my
first trip to Guangdong. Both were exemplary members of the Energy
Policy Research Group (EPRG) during their time in Cambridge.
Lewis Dale has supported this project from the start, travelling to China
twice and providing me with first-hand insights into the UK’s own elec-
tricity reform. Lewis has also answered many of the questions we have
received over the course of the project about power market reform from
Chinese stakeholders and was always willing to meet Chinese power sec-
tor visitors to the UK. Lewis is a co-author of Chap. 4.
In addition, I would wish to thank the many Chinese stakeholders
who have met me over the last five years to talk about power market
reform. The topic is huge and without them I would not have been able
to begin to get a sense of what the issues were for China. I would wish to
thank all those stakeholders I have met in Beijing, Guangdong, Yunnan,
Fujian, Zhejiang and Jiangsu for their time and generosity in answering
my questions and explaining their insights to me. Thanks go to Professor
Yongsheng Feng of the Chinese Academy of Social Sciences. Yongsheng
oversaw the publication of academic paper versions of Chaps. 2, 3 and 4
in one of the Academy’s journals, Financial Minds, providing many judi-
cious editing comments and much encouragement on the papers in the
process. I would also wish to thank Rachel Chen, Bai-Chen Xie, Jun Xu
and Geoffroy Dolphin for their help with the editing of the book
manuscript.
Finally, I should acknowledge all of the support I have received from
my own university. The book is an output of the In Search of ‘Good’
Energy Policy grand challenge project of Energy@Cambridge (which has
now become Energy Transitions@Cambridge). I would wish to thank
Professor David Newbery of the EPRG, Dr Isabelle de Wouters and Dr
Acknowledgements xi
Shafiq Ahmed of Energy@Cambridge in particular for their support for
this work. I am happy to acknowledge funding from the ESRC Global
Challenges Research Fund (which supported the work behind Chap. 2),
an ESRC Impact Acceleration Award (for Chap. 3) and funding from the
Judge Business School impact fund (for Chap. 4). Finally, I also wish to
thank my family—Yvonne, Daisy and Sammy—for all of their support
and willingness to put up with my trips to China!
