"Coal eats power": hidden troubles of coal and electricity integration

Experts suggest that the integration of coal and electricity should be promoted by the market mechanism, and the government should not provide preferential policies to intervene. The "12th Five-Year Plan for the Development of the Coal Industry" has recently been proposed to encourage the integrated operation of coal, electricity, and transportation. Focus on supporting coal and electricity companies to restructure and encourage enterprises to participate in the construction of coal transportation channels.

Wu Hao, deputy director of the National Energy Administration, stated at the press conference that under the premise of meeting the requirements of safe production, resource recovery and environmental protection, and protection of workers, the power companies are welcome to run coal mines, and coal mines are also welcome to run power plants.

The reality of the integration of coal, electricity, transportation and transportation has three forms: The first is that, under the name of one investment entity, coal mines and electric power are used to achieve coal and electricity co-operation; the second is between coal companies and power companies. Mutual shareholdings; the third is the reorganization and reorganization of large-scale power groups and coal groups.

When interviewed by a reporter from the China Economic Times, China’s second-largest coal producer, China National Coal Group Party Committee’s vice-president Wang Jun, believes coal-fired electricity pools are relatively reasonable. In his view, this approach can enhance the overall resistance to risk in the event of major market fluctuations.

For the latter two methods, Wang Hao believes that mutual equity, because of the property rights of the border, can not achieve "the profits of coal mines to make up for electricity," can not change the reality of coal companies to make money, power companies lose money; but the large coal and electricity The possibility of group reorganization is even smaller.

“I personally think that coal-fired electricity joint ventures should focus on the development of electric power in the pits. In the coal mine annex, the same investment entity can build power plants under proper conditions, can shorten the transportation distance, and can use low-quality coal to generate electricity, and the benefits are also obvious.” Say.

Wang Hao said that the threshold for coal mining enterprises to enter the power industry is relatively high and project approval is difficult. In contrast, since the new power plant project is relatively easy, after the power companies enter the coal field, there is an advantage to carry out power generation in the pits.

On the other hand, thermal power companies that have been deeply involved in losses since 2010 have been more than satisfied with the integration strategy for coal, electricity, and transportation.

According to the data, in 2010, the losses of thermal power generated by Huaneng, Datang, Huadian, Guodian, and China Power Investment’s five major power generation groups had reached 13.7 billion yuan. In the first 7 months of 2011, the thermal power business of the Big Five Group exceeded the total loss for the entire year of 2010. Loss was 18.09 billion yuan.

In the interview with the China Economic Times, China Investment Advisor Energy Industry Researcher Song Zhichen said that the integration of coal and electricity and transportation will help reduce the cost of coal-fired power plants and increase the profitability of thermal power plants. However, coal companies need to spend a lot of money on capital expenditures. This is a thermal power plant. The unbearable financial burden on companies.

"The loss of thermal power, thermal power companies want to annex coal companies, but the lack of funds; coal companies are lucrative, but there is little interest in the acquisition of coal-fired power companies, so the actual development of coal-fired joint ventures will be more difficult." Song Zhichen said.

To solve the "coal and electricity contradiction" needs further reform "market coal" and "planned electricity" is the focus of the contradiction between the price of coal and electricity.

Wu Hao believes that there are two ways to solve this problem: one is to go in the direction of the market, all coal should be released, and electricity prices should be increased and dispatched under regulated circumstances. The other is that electricity is controlled by the state and coal prices must be controlled. However, "Let the market allocate resources more efficiently and use prices as an aid to regulate market supply and demand. This direction is clear."

Lin Boqiang, director of the China Energy Economic Research Center at Xiamen University, said in an interview with the China Economic Times that coal companies have entered the power sector and that power companies have entered the coal sector, all of which involve efficiency problems. According to the current situation, coal is profitable, electricity is depleted, and coal is relatively strong. If coal and electricity are forced to be integrated, some companies will “have coal not necessarily generate electricity” and eventually “coal eats electricity”.

He fears that the integration of coal, electricity, and transportation at the national level will encourage the integration of coal, electricity, and transportation in some places to introduce preferential policies, and this may not enable "coal power to digest each other's prices."

“We encourage coal and electricity integration, and we encourage capital to marry, and we still have to go professional.” Wu Wei stressed that the government should encourage enterprises to develop in accordance with market principles and the integration of upstream and downstream industries. As for whether coal and electricity are tied together, it is a business owner's business.

As for some power plants that are now engaged in coal production, will their own power plants use their own coal, Wu Hao believes that, in addition to some pit power stations, other coal will be market-based, which is where the low cost, which place is good, Where the coal will go?

In Song Zhichen's view, fundamentally speaking, the contradiction between coal and electricity comes from the lag in power system reform. "Market coal" and "planned power" have caused thermal power companies to bear significant cost pressures. This is an unsolvable problem in the integration of coal, electricity, and transportation, and can only be achieved through power system reform.

Wu Hao also agrees with this point. He said that in terms of reforms, coal-fired power reform should be further promoted. "The relevant documents of the State Council in 2002 have a design for the power reform. Some of the work here has not yet been completely completed, and we need to further advance some reforms in the power system."

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