New energy enters the market to lead a new direction for the healthy development of thermal power

New energy, as the "dear" of the times, was born with a "golden spoon" in his mouth. Under the incentives of a series of high-subsidies and full-time preferential policies, the scale of new energy has grown rapidly. When the priority guarantee system cannot carry the growing power of new energy, the market plays the decisive role of the market in resource allocation and the use of market means to absorb new energy will become the best choice for new energy power generation. However, as an organic overall system that maintains real-time balance at all times, any local reform will affect the whole body. The reform of new energy entering the market will inevitably have a very far-reaching impact on thermal power. Some industry authoritative experts said that this reform document can be said to be the second major change in the thermal power industry after Document No. 1439.

(Source: Telecom New Media Author: Yan Xin)

Thermal power enterprises occupy an important position in the power system

For a long time, thermal power companies have occupied a key position in my country's power system, ensuring basic electricity supply and providing regulation capabilities for the power system. However, at a time when the energy landscape is changing, thermal power companies with traditional business models are facing a series of changes.

Thermal power has long been the main force in my country's electricity production and the pillar of energy supply. However, with the rapid development of new energy, the number of thermal power utilization hours has decreased. The baseline for the planning and design of coal-power units was 5,500 hours, while the number of thermal power utilization hours in the country in 2023 was 4,466 hours. By 2024, some provinces with more new energy installed capacity have reached nearly 3,100 hours in the whole year. In addition to providing electricity, thermal power is also the main method of centralized heating. Cogeneration saves about 1/3 of coal consumption compared with thermal power distribution capacity, and the heating capacity accounts for more than half of the centralized heating supply in the north.

Thermal power has long been used as a ballast for power safety and has played a role in protecting the top of the world for a long time. At present, my country's power system changes significantly, the supply-side renewable energy is affected by natural conditions and the output fluctuates greatly, and the load on the demand side varies significantly with seasons and holidays. With its stable output characteristics, thermal power has long been responsible for maintaining system balance and ensuring stable operation of power. However, during periods when the bottom or peak are needed, the actual value of electrical energy is relatively high. However, the upper limit of clearing electricity prices in some spot areas is relatively low, and the medium- and long-term trading prices in non-spot areas only fluctuate by 20% above and below the coal-fired benchmark price, which cannot reflect the actual value of time-sharing electricity energy.

Thermal Power currently continues to maintain a medium- and long-term high-proportion contracted business model. Thermal Power currently maintains a medium- and long-term high-proportion contracted business model, with annual transactions pre-transactions of 80% of the annual electricity volume, and the price fluctuates by 20% above and below the coal-fired benchmark price. Under this model, the operating efficiency of thermal power companies depends largely on coal-fired prices. In recent years, coal prices fluctuated significantly, exceeding 3,000 yuan in 2022, bringing huge pressure to the cost control of thermal power companies. In 2024, domestic coal prices generally fell, the long-term contract prices of main production areas were stable, and the decline in market coal narrowed. Taking the tax-inclusive price of Q5500 direct coal slabs in Changzhi, Shanxi Province as an example, it was 745 yuan/ton at the beginning of the year and fell to 640 yuan/ton at the end of December. The annual average price was 708 yuan/ton, a year-on-year decrease of 76 yuan/ton, a decrease of about 9.6%. The fluctuations in coal prices have caused many uncertainties in cost control and efficiency acquisition of thermal power enterprises.

Thermal power and other regulatory power supplies bear all kinds of unbalanced funds, auxiliary services and other expenses in the market. Among them, unbalanced funds are mostly caused by the curves and price mismatch of priority power generation and priority power purchase. Different places have different statements, such as "predictive deviation costs" and "Youfa You Purchase Curve Matching Deviation costs" and other dual-track unbalanced costs. In addition, some areas also have special cost sharing accounts. For example, a spot continuous operation area sets up "risk prevention fees" to control market risks, among which the compensation for new energy risk prevention is borne by all coal-fired units.

To sum up, thermal power has a huge role in energy supply and power grid regulation. Under the traditional business model, the benefits are greatly affected by coal prices, and it is urgent to explore more reasonable development paths under the new energy pattern.

New energy market entry promotes new upgrades in the thermal power industry

The release of the document "Notice on Deepening the Market-oriented Reform of New Energy on-grid Electricity Prices and Promoting the High-Quality Development of New Energy" (Development and Reform Price [2025] No. 136, hereinafter referred to as the "Notice") is an extremely critical step in the journey of building a new power system, and will significantly change the industry positioning and way of obtaining profits of thermal power.

The entry of new energy into the market marks the beginning of shaking the position of the main force in thermal power production. In the process of building a new power system with new energy as the main body, thermal power has long played the role of "midwife" and "nanny" of new energy. The formal entry of new energy into the market means that new energy has officially "grown up" and has become the main power generator in the market with equal status of thermal power. The sustainable development of new energy means that new energy has officially moved towards the main force of power production, so the utilization hours of thermal power will further decline in the future. The thermal power industry will gradually transition from mainly providing electricity to providing capacity guarantee and adjustment services. In terms of heating, when new energy is in full swing, electricity prices often become very low, which makes the electricity part of the cogeneration unit based on heat-fixing electricity will be settled at extremely low market prices, and it is even difficult to recover the variable costs. It is necessary to further improve the market-oriented capacity compensation mechanism to ensure the cost recovery of thermal power companies.

After the new energy market enters the market, the value of thermal power supply is rewarded. In accordance with the requirements of the "Notice", "Improve spot market trading rules, promote fair participation of new energy in real-time markets, and accelerate the realization of voluntary participation in the recent market. Appropriately relax the spot market price limit, the upper limit of the spot market declared price is determined to consider the peak electricity price level of industrial and commercial users in various places, and other factors such as the declaration price limit, and consider other factors that new energy can obtain outside the power market, and are specifically formulated by the provincial price authorities and relevant departments and adjusted in a timely manner." Judging from international experience, as new energy enters the market on a large scale, the average electricity price level in the market will further decline, and the widening market price difference will push thermal power companies to no longer "grab electricity" but rely more on high electricity prices to recover costs. At the same time, the "Notice" requires that "in areas where the electricity spot market is continuously operated, the average market transaction price is determined in principle according to the weighted average price of similar projects in the monthly real-time market of the power generation side; in areas where the electricity spot market is not continuously operated, the average market transaction price is determined in principle according to the weighted average price of similar projects in the medium and long-term trading of similar projects in the power generation side with active trading cycles." It also means that new energy projects with good locations have higher returns, and the position signal found in spot market prices will be more important.

After the new energy market enters the market, the scale of various unbalanced expenses shared by thermal power will be reduced. As new energy enters the market, the scale of priority power generation entities has shrunk, and the unbalanced costs of the dual-track system have been reduced. The settlement method of the new energy sustainable development price settlement mechanism in the "Notice" clearly states that "for the electricity included in the mechanism, power grid enterprises conduct price difference settlement according to the mechanism electricity price every month, and include the difference between the average market transaction price and the mechanism electricity price in the local system operation expenses; other forms of price difference settlement will no longer be carried out in the initial stage." This means that while users use clean and green energy, they also have to bear market risks that the output of new energy is affected by natural conditions. For thermal power companies, this will reduce the burden of various unbalanced expenses that have been borne for a long time, thereby optimizing the operating environment and improving economic benefits.

After new energy entered the market, the volume and price of thermal power in the medium and long term market have changed. The "Notice" points out that "continuously improve medium- and long-term market trading rules, shorten trading cycles, increase trading frequency, and achieve weekly, multi-day and daily openings. Both supply and demand parties are allowed to reasonably determine the volume, price, curve and other content of medium- and long-term contracts based on the characteristics of new energy output, and adjust flexibly according to actual conditions." This means that the signing of medium and high proportions of medium- and long-term market transactions has loosened, and users have more choices, and they can choose to purchase electricity in medium and long term or participate in the spot market. It can be foreseen that the medium and long-term prices will gradually be coupled with the spot market prices, approaching the changing cost price.

To sum up, the entry of new energy into the market has had a comprehensive and deep impact on the thermal power industry. The thermal power industry is already at the intersection of transformation and transformation. The thermal power industry needs to find its own position in the new power system and actively adapt to market changes.

New directions for thermal power health transformation and upgrading

Thermal power needs to actively transform from the aspects of system positioning, planning standards, production methods, marketing strategies, etc., and explore a sustainable path of coordinated development with new energy to better serve the stable operation of the power system and the optimization and upgrading of the energy structure.

First, transform to ensure the power supply and optimize the unit function. For the thermal power unit itself, it is urgent to make relevant transformations around the positioning of the power supply under the bottom. First, you need to have the ability to start and stop quickly, and to achieve within-day start and stop if conditions permit. During the period when new energy is booming, thermal power can give new energy space to provide space for output, and when the system needs to provide a bottom line, quickly start to maintain the system balance. Second, you need to have the ability to climb hills quickly. Due to the discontinuous and unstable output of new energy, coal-power units are forced to perform reverse discontinuous and unstable adjustments to achieve the effect of positive and negative offsets to maintain system balance. The unit cannot maintain stable output, and the requirements for unit regulation performance are higher. Third, cogeneration units need thermoelectric decoupling. Since the market price of new energy is very low for most periods after it is launched, relying on green electricity to provide heating will be more environmentally friendly and economical.

The second is to innovate the planning and operation model to adapt to market demand. At the planning level, first, the new coal-electricity unit should fully consider the position signal of the spot market price, and select the location on nodes that are prone to blocking and clearing at high prices. Second, low coal consumption should not continue to be the primary criterion for selecting coal-fired power main engines. In the future, thermal power will continue to operate during a process of significant load adjustment or even start-stop. Blindly pursuing low coal consumption is a detour that seems low-carbon but is actually contrary to the "dual carbon" goal. Incremental unit planning should take adjustment capacity as the primary indicator, followed by coal consumption. In terms of production operation, it is necessary to predict spot market prices more accurately in the future, and to reasonably arrange the production operation model based on market prices. As for coal mixing, it is necessary to mix in segments more accurately. When the unit needs to be pushed out at a high price or when the unit starts and stops, ensure that the unit burns good coal and can quickly carry loads. In other periods, it is possible to consider adding inferior coal to reduce costs.

The third is to adjust medium- and long-term marketing strategies and optimize business models. The trading method of trading most of the electricity in advance through annual transactions is no longer acceptable. First, after the new energy market entered the market, the financial attributes of medium- and long-term financial hedging have become more obvious. The electricity volume signed in medium- and long-term contracts may not be fully issued in accordance with the plan. Thermal power companies should more scientifically predict the actual demand of the power system, reasonably arrange coal procurement plans, and organically connect coal procurement with quarterly peak-shaving work. At the same time, it is necessary to avoid losses caused by unreasonable assuming excessive supply guarantee responsibilities. In addition, a quantitative standards and evaluation mechanism for supply guarantee should be established and improved. When conducting business evaluation and assessment of power generation enterprises, the impact of supply guarantee factors should be fully considered, and the unreasonable supply guarantee responsibility factors should be deducted, and the operating evaluation and assessment system of power generation enterprises should be optimized to promote the healthy and stable development of the power industry.

At the same time, it is also necessary to improve the electricity price structure system and reasonably share costs. Continue to improve the three-part coal-fired power income system consisting of capacity electricity bills, adjustable electricity bills, and electricity energy bills. The first is to further improve the capacity electricity price of coal-power, and realize the recovery of investment costs of coal-power projects through capacity electricity prices, reflect the capacity value of coal-power, and solve the problem of food and clothing for coal-power under low utilization hours. Secondly, improve the compensation and incentive mechanism for coal-fired power to participate in regulation, actively promote the construction of spot markets, discover price signals, reflect the flexible adjustment value of coal-fired power, and effectively encourage coal-fired power to play the function of power system regulation through rapid climbing, frequent start and stopping, and support the healthy development of clean energy. Finally, it is clear the cost sharing standards. Thermal power needs to manage its own costs in a refined manner, clarify whether the costs of its own sub-items are effectively recovered, and reasonably allocate various expenses.

To sum up, the entry of new energy into the market has brought profound impacts to the thermal power industry from market share to operational models and technological upgrades. The thermal power industry must actively respond to these challenges, while fully grasping the opportunities brought by new energy, and through a series of measures such as technological innovation, business expansion, and management optimization, we can achieve the transformation and development from traditional thermal power to new type of bottom-up power supply, so as to better adapt to new changes and new needs in the energy market and lay a solid foundation for building a new power system.