Shanghai thermal on-grid price expected to rise

Shanghai thermal on-grid price expected to rise

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The Shanghai local government has recently released a document concerning the advancement of power supply guarantee and market-oriented reform that will serve as a supporting document for direct transactions between power users and power generation companies.

This is in accordance to the MIIT and NDRC document on cost reduction in 2021. Due to a tight power supply and the rising cost of coal-fired power (notably due to coal price increases, see graph below) this year, the “base price + fluctuating price” power market price structure, introduced by the NDRC in October 2019 (NDRC), must be further improved according to the document. This price mechanism allows the power generation companies (coal-fired power plants) and power users to negotiate prices within a given range instead of following a fixed rate determined by the government. Additionally, a previous regulation forbidding increases in electricity prices has been withdrawn.

(Shanghai GOV)