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The planning of new power system needs to change due to the "city"

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Electric power planning is a program to guide the development of the power industry and an important part of energy planning. It corresponds to and connects with the five-year plan for national economic and social development. A history of power planning for reform and opening up records the footprints of my country's power reform, opening up and development, and embodies the wisdom and hard work of generations of power builders. Especially in the past twenty years, the power industry has planned and deployed to actively respond to climate change, implement carbon reduction goals, increase efforts to optimize the power structure, and continue to promoteElectricity MarketIntegrated reform has made important contributions to the country's economic and social development and energy transformation and upgrading.

The wind direction of power planning has changed from the five "five-year plans" in the planned economy period to the five "five-year plans" in the early stage of the market economy after reform and opening up, and then to the four "five-year plans" since 2005 to the present, guiding the booming development of my country's power industry. Since the launch of my country's new round of power system reform in 2015, the national electricity energy market, auxiliary service market and capacity mechanism have been fully promoted, and the operation behavior of the two-end late-use entities in a competitive environment has undergone significant changes. my country's power planning environment has also undergone fundamental changes. The power planning that is dependent on the resource planning allocation mechanism is no longer suitable.New power systemDevelopment requirements. At the beginning of 2022, the National Development and Reform Commission and the National Energy Administration issued the "Guiding Opinions on Accelerating the Construction of a National Unified Power Market System" proposed to improve the power planning system that adapts to the market-oriented environment and focus on giving full play to the guiding role of market price signals in power planning and construction.

The spot power market is the core of the power market. As the time node is about to usher in the end of the "14th Five-Year Plan" and the launch of the "15th Five-Year Plan", the construction of the power spot market has also ushered in an important milestone. In 2023, the National Development and Reform Commission and the National Energy Administration successively issued the "Basic Rules for the Electric Power Spot Market (Trial)", "Notice on Further Accelerating the Construction of the Electric Power Spot Market", and "On the Establishment of Coal Power CapacitanceElectricity PriceShanxi and Guangdong have successively issued notices on the official operation of their provincial power spot markets, and the construction of the power spot market is achieving full coverage in a safe and orderly manner across the country. The planning of the power system urgently needs to change due to the "city", adapt to the construction of the power spot market, and achieve the optimal allocation of power resources with market-oriented thinking.

What "changes" have taken place in the planning environment?

Change 1: From "management, production, management and maintenance" to "self-bearing profits and losses": In the power spot market, power generation companies will make investment and operation decisions with the goal of maximizing profits.

In the planning system, no matter what type of power generation power supply, the scale of power generation installation construction, the annual power generation plan of the unit, etc. are determined by relevant government departments. The starting method of the unit, the daily power generation plan (quantity), etc. are arranged by the power dispatching department, and the power produced by the unit is purchased by the power grid company. The planning system that manages both production (approved projects) and maintenance (ensures investment recovery) makes it "uncontrollable" how much electricity the power generation company sells, what price it sells, and how much income it gets.

In the power market environment, power generation companies become "free" and will make investment and operation decisions with the goal of maximizing profits. From investing in factory construction, signing medium- and long-term contracts to spot volume quotations, it is entirely an independent behavior of the company and is responsible for its own profits and losses. Considering that medium- and long-term financial contracts are the spot market, the main decision on the power generation behavior is the spot market, that is, the market operation agency will optimize the power generation power of each generator set on the operating day based on the pre-quotation of power generation, and clear out the marginal electricity price of the node. According to the spot time-sharing settlement rules, generator sets strive to generate more power during high electricity prices and less power during low electricity prices, that is, the higher the electricity price, the higher the power generation income, and the higher the profit. And vice versa. In extremely low-price periods, such as when the 0 price or negative price, power generation will cause losses. According to this operating demand, in addition to the quotation strategy, power generation companies will actively improve their flexibility, including full-power power generation capabilities, deep-tuning capabilities, rapid climbing capabilities, and rapid start-stop capabilities. Only with these flexibility can power generation achieve maximum profit or minimize losses.

Change 2: From "using electricity on demand" to "using electricity on price": In the spot power market, power users will decide on electricity usage with the goal of minimizing electricity bills and expenditures.

In the era of catalog electricity prices, any scale of electricity load determines its electricity usage behavior and expenses based on the peak and valley level price specified in the catalog electricity price and its time period. Often, the peak and valley price levels in the catalog electricity price are difficult to substantially affect the user's electricity consumption characteristics, and it is even more difficult to achieve the effect of load promoting the balance of the power system, and even the effect of reverse peak shaving. During the peak period of annual load, the two methods of planning and economical use, which are mainly adopted, are "free" orderly electricity use and "paid" demand response, are not in line with the methods of maximizing social welfare.

In the spot market, the price signal determined by supply and demand will be more effective in guiding users' electricity use behavior in time and space. From a time perspective, there will be more significant price differences in short-term intraday prices and long-term seasonal prices. When the technical capabilities and the production capacity are not significantly affected, users will adjust their electricity usage behavior to save energy consumption costs. From a spatial perspective, affected by the long-term blockage of the main transmission channel, obvious price zones appear in the market. When conditions are met, power users will be guided to consider investing in and building factories in power centers or low-price zones through the zoned price signal, reducing their own electricity costs and alleviating the blockage of the transmission network, playing a role in on-site consumption and reducing network losses, further saving resources and releasing social welfare.

Change 3: From "hiding behind the table" to "going to the front of the stage": The electric spot market provides clear price signals and business models for independent energy storage investment

Under the planning system, there is no price mechanism for independent energy storage in the traditional on-grid electricity price and catalog electricity price system, and the local power authority often provides charging and discharging prices, times, economic compensation, etc. These customized policies have great hidden dangers. First, the policy is unstable, and any regulated electricity price has the risk of adjustment, especially using costs as the pricing basis. When costs drop, prices will inevitably be affected. Second, the policies are not in place and the payment subjects for energy storage subsidies are unknown. When a certain type of entity is forced to bear the subsidy costs, disputes will inevitably arise without clarifying economic responsibilities. Third, there is vicious competition. If fixed subsidies or the policy of enjoying individual projects is determined through a demonstration method, it is likely that bad money will drive out good money. The above reasons lead to either independent energy storage being "cannot be able to calculate the accounts", or they can only hide in the internal organs of the use organs, and serve a single organs as auxiliary technology, or even become a "road line" to distribute and not use them.

The electric spot market provides a clear revenue model for independent energy storage including pumped storage and new energy storage. That is, from the short-term operation level, independent energy storage will optimize its charging and discharging plans based on the spot price forecast a few days ago, and achieve low-priced charging and high-priced discharge to earn electricity arbitrage income. From the long-term investment level, driven by spot market prices, energy storage investors will spontaneously evaluate whether a market has sufficient investment return in the future, that is, there is a regular high enough spot market spread to determine sufficient income to recover investment. Therefore, the short-term and long-term price signals of the spot market will guide the operation of existing energy storage and the investment decisions for new energy storage.

Change 4: From "earning, purchasing and selling price difference" to "collecting network fees": The spot power market requires power grid companies to fully connect the relationship between power grid investment and power market efficiency

Under the planning system, the "three public" scheduling method is adopted, and the regulation on the power generation and energy storage sides is relatively regular. Considering the rigidity of the load, the long-term power system trend is relatively regular. Since the power generation side adopts a fixed on-grid electricity price and the user side adopts a directory electricity price settlement method, under the operating model of earning the "purchase and sales price difference", which grid structure has no impact on the economic benefits of both generation and use.

In the spot market, the traditional business model of unified purchase and sales of power grid enterprises has undergone a complete change, from the power sales revenue brought about by the purchase and sales price difference to the improvement of cost control and investment management level. At the same time, the investment scale of power grid enterprises is subject to stricter supervision. In 2020, the National Development and Reform Commission and the National Energy Administration issued the "Notice on Strengthening and Standardizing the Investment Management of Power Grid Planning", which strengthened the supervision of power grid investment and put forward requirements such as "grid planning should be based on market-oriented principles and fully connected with relevant market entities." The return on investment is strictly regulated, and grid planning is required to accurately reflect the relationship between grid investment and the operational benefits of the power market. According to the economic benefits of market entities, it provides a sufficient planning basis for grid investment supervision and transmission and distribution price verification to ensure the operating benefits of grid enterprises.

Why does planning need to be "changed"?

The power system planning is mainly aimed at when, where, what type and scale of power generation and power grid facilities will be built in the future. The main processes are load prediction, power supply planning, and power grid planning. Traditional power system planning focuses on the physical characteristics of the source grid load. Load prediction mainly predicts the future "rigid" maximum load and electricity consumption based on the historical development trend of economic and social development and load; power planning mainly aims to meet the demand for "rigid" load supply and clean energy, consider resource characteristics, and form various power construction goals mainly based on traditional thermal power, hydropower and new energy; according to load and power planning, consider the large-scale summer and winter mode model, based on the analysis methods such as trend, stability and short circuit of extreme power system working conditions, a power grid planning scheme is proposed to meet the safety of power grid operation; planning economic analysis is mainly aimed at investment cost analysis. Since the generation and use links are all fixed electricity prices, the expected income and economic benefits of the investment entity are not used as the key evaluation content of the planning link. Traditional power system planning is no longer suitable for the electricity spot market environment, and does not take into account the economic behavior of various planning elements in the market environment. There will inevitably be resource mismatch and economic inefficiency of traditional planning methods in the market environment, and it will not effectively play the decisive role of the market in resource allocation.

Reason 1: Planning will affect the market

The planning determines or affects the amount of source network load storage. In the market, the amount of supply and demand parties determines whether it is sufficient or tight, which will in turn affect the price and the economy of market entities.

Load forecasting is the pioneer of planning work and directly affects the planning scheme of power generation and power grid. As all industry and commerce enter the market, especially the gradual decline in the scale of agency power purchases, the price-responsive load of industrial and commercial users in the market will inevitably actively transfer the load when the price is high. Then the maximum load forecast of conventional methods will exceed the actual power load in the future, which will lead to an unreasonable increase in the planned scale of power generation and power grids.

Power planning affects the supply of the power market. In the future, new power generation resources such as thermal power and new energy will enter the market competition, and supply-side competition will affect the electricity price level. When planning leads to excessive power construction, it will cause excessive supply side in the future, resulting in vicious competition. The frequency and duration of floor prices will increase, which will lead to a decline in the overall income level of the power generation side.

Grid planning affects blockages in the power market. Grid blockage is the main influencing factor in the formation of electricity prices at each node, so the structure and constraints of the power grid will directly affect the economics of market entities. Grid safety constraints are a key factor affecting electricity prices and power generation methods. Therefore, although the power grid is not an explicit market trading entity, the power grid greatly affects the volume, price and market economy of transactions. For example, the main section of the four fish in the Gansu market divides the Gansu market into Hedong and Hexi price areas. Due to the blockage of the section, the Hexi area where low-cost new energy is concentrated is frequently restricted to the Hedong area where loads are concentrated, forming a situation of high prices in Hexiwo Power and Hedong. Similar ones include Hufeng section in the Mengxi market and cross-river section in the Jiangsu market. Therefore, a reasonable power grid planning can alleviate blockage in the future market, and the electricity price level that blocks downstream will be relatively reduced, effectively reducing the cost of users' power purchases. The low-cost power generation resources that block upstream can be sent out more, so that the power situation in the power generation cell can be alleviated.

Reason 2: The market will affect planning

In the power market, the operation and investment behavior of the power generation side, energy storage side and load side are mainly determined by economic benefits, and the market will ultimately decide whether the planning goals can be achieved.

On the power supply side, the investor will conduct an economic analysis of investment based on the forecast of future market prices and power generation. If the spot price in the future is too low, the current photovoltaic weighted average electricity price and consumption situation in some markets will be difficult to support future continuous investment without supporting off-site mechanisms (such as government authorized contracts, compulsory cooperation, etc.). This is not a problem with the market design itself, but in a market where photovoltaics account for too much of the marginal cost of nearly 0, the marginal value of the electricity in the photovoltaic period is very low, reaching a low price of 0 or negative price.

On the load side, users will adjust their electricity usage according to the high and low prices in the spot market, especially if excessive prices will cause users to transfer electricity usage. Then the highest future load predicted by conventional technology will not reach the original expected level due to price guidance. Moreover, under the incentive of the power market, new loads such as distributed power supplies, electric vehicles, and virtual power plants are booming, actively participating in market transactions, increasing the complexity of load forecasting.

On the energy storage side, investors will judge the price difference level in the future spot market. After a large amount of energy storage enters the market, if the conditions of other systems remain unchanged, the converging charge and discharge behavior will lead to a rise in low prices and a decline in high prices and a decline in price, and then the price difference will decline. When the price difference falls to the critical point of energy storage investment, no more investors will enter. On the one hand, independent investment behavior is conducive to ensuring the returns of energy storage investors, and on the other hand, avoiding the loss of economic benefits of users due to the government's blindly compulsory supporting requirements.

On the grid side, the grid planning must cope with the complex power market environment, respond to changes in site layout and line construction timing caused by uncertain power construction, changes in system trends and distribution balances caused by uncertain power transactions, changes in load size and characteristics caused by uncertain power prices and demand response mechanisms, etc., so that the planning scheme has the ability to adapt to changes in various operating conditions.

Without considering the impact of the spot power market, traditional planning methods that only focus on safety may have economical inefficiency results, which will lead to vicious competition on the power generation side, difficulty in reducing the cost of power purchase on the power consumption side, and inability to exert adjustment benefits on the energy storage side, which will in turn lead to inefficient utilization of social resources, and ultimately the user will bear the planning costs.

How to deal with "change" in planning?

In the planning of new power system, the industry encounters the confusion of the energy impossible triangle, which is reliable, clean and economically unavailable at the same time. Electricity planning in the power market may provide new ideas for this problem, namely, with the boundaries of power supply (the highest acceptable level of electricity shortage) and energy transformation (the renewable energy generation to achieve the "dual carbon" goal), in the power market environment, the above goals are achieved with the lowest investment and variable costs through planning.

Strain 1: Load prediction should fully consider the user's price response behavior. Only considering the typical daily load curve can no longer meet the needs. On the basis of traditional medium- and long-term load prediction technology, considering the impact of various market factors such as power price fluctuations, demand-side response mechanisms, and user behavior psychology on load elasticity, through the analysis of the power consumption flexibility and cost tolerance of industrial and commercial loads of high proportion types, combined with the future price trends of the spot market, the maximum load forecast level is reasonably adjusted.

Strain 2: Power supply planning should fully consider the capacity cost recovery mechanism. Adding the overall power supply reliability standards of the power system to the existing reliability management system can be the highest power shortage level that can be endured, and determining the consumption or carbon emissions of new energy in combination with the "dual carbon" target process, as the main boundary of power optimization planning, forming planning solutions such as coal-fired power, new energy, coal-fired power adjustable capacity, and energy storage. In a mature power market environment, power investment is mainly completed by the market, and power planning plays the role of determining the total supply-side demand. However, in practice, the long-term dynamic balance of the market is often inconsistent with the short-term operational needs of market entities, which may cause the problem of Missing Money in the electricity market, which may distort the investment structure. In this case, the market model should be improved in a timely manner, and on the basis of evaluating future electricity energy market revenue, a capacity cost recovery mechanism should be reasonably designed to ensure the economicality of power generation enterprises for investment and construction of power sources and promote the realization of planning goals.

Strain 3: Power grid planning has shifted from safety-centered to safety-based and market-based benefits-centered. Based on traditional grid planning that considers safety, economic transmission planning is carried out. According to the decisive law of the market allocation of resources, the planning is mainly guided by market price signals. On the basis of meeting safety constraints, consider the economic benefits of power market members, including the total production cost of the system, the total electricity purchase cost of users, blockage costs, and net income of power generation enterprises, etc., establish a scientific evaluation index system, and select a combination of solutions with good market economy and significant efficiency improvement, reasonably arrange the power grid construction and investment timing, and establish a precise investment planning system with the goal of maximizing the social welfare of the power market.

Strain 4: Explore the comprehensive planning method of source network load storage. Traditional planning methods are performed in the order of load prediction, power planning and grid planning. However, as mentioned above, there is a mutual influence between planning and market, and there is also a coupling relationship between the operation of source network load storage. Comprehensive planning uses power generation resources (coal power, new energy, etc.), flexible resources (coal power flexibility transformation, energy storage) and user-side adjustment resources (price-responsive load) as planning means, and takes into account the operation behavior of the generation and storage side in the market environment, and uses macro goals such as reliability, cleaning, and transformation as the boundary, and solves the source network load storage planning scheme through comprehensive optimization planning methods. Based on the planning scheme, the planning scheme is verified through long-term simulation of the power spot market, that is, whether the existing and incremental power systems can meet the macro planning goals within the 8760-hour range.

General Secretary Xi Jinping attaches great importance to the leading role of planning in construction and development, and clearly points out that "science in planning is the greatest benefit, planning mistakes are the greatest waste, and planning troubles are the greatest taboo." Power system planning is a complex system project. At an important node where my country's power resource allocation is in the "planned transition period to market" and the power system is in the "transition period of new power system". Power system planning faces greater challenges. Planning workers should advance according to the times, change according to the situation, and change from the "city". They should fully consider the reform process of my country's power market, change planning ideas and models, truly play a leading role in planning, and provide strong support for the construction of new power systems.


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