news

at the recent natural gas industry development conference and this winter and next spring situation sharing meeting (hereinafter referred to as the "sharing meeting") hosted by the shanghai petroleum and natural gas trading center, relevant data provided by the relevant person in charge of "three barrels of oil" showed that this year's "peak peak" during the "summer" period, high temperatures continue in east china, south china and other places. when hydropower output reaches its peak in southwest china, the demand for gas and electricity peaking increases. starting in may, domestic gas-fired power generation has gradually increased. in july, power generation increased by nearly 48% month-on-month to 35.1 billion kilowatt hours.

with the accelerated construction of my country's new power system, the long-term freedom fromchina electric powernatural gas power generation, outside the industry focus, is increasingly receiving attention. however, regarding the development prospects of gas power, different industries have distinct opinions.

china business news reporter noted that at the sharing meeting, oil and gas industry insiders believed that as the international natural gas market situation changes and domestic natural gas supply and demand ease, natural gas power generation will become "a key supporting power source to build a new power system" and has great potential; and the industrial chain the downstream power generation industry is more cautious due to concerns about uncertain factors such as energy security and price mechanisms, as well as the difficulty of making profits from gas and electricity. they believe that natural gas power generation is still in the market exploration stage and will exist as a regulating power source for a long time.

different attitudes between upstream and downstream

petrochinathe relevant person in charge said at the meeting that gas-fired power starts and stops quickly, taking only 9-10 minutes to start at 100% full load. it has a short construction period, requires less land and water consumption, and can cope with the intermittency and randomness of renewable energy power generation. the challenges brought to the stable operation of the power grid are suitable for bundling and delivering new energy in renewable energy-rich areas, and are also suitable for building load centers in key cities and regions to improve environmental quality and replace the orderly exit of coal power.

in recent years, my country's natural gas power generation installed capacity has grown rapidly.tianfeng securitiesresearch reports show that the average annual compound growth rate of my country's gas and electricity installed capacity from 2010 to 2023 was 12.7%. as of the end of last year, the installed capacity was approximately 126 million kilowatts, and the newly installed capacity exceeded 10 million kilowatts. according to anothersinopecrelevant data shows that from january to august this year, multiple domestic gas-fired power generating units were put into operation, with newly installed capacity exceeding 10 million kilowatts, driving gas and electricity consumption to increase by 7.5% year-on-year during the same period, reaching 45.4 billion cubic meters.

regarding the development prospects of gas power, the meetingmany people in the oil and gas industry believe that as domestic natural gas reserves and production increase, and global liquefied natural gas (lng) liquefaction projects are put into operation after 2026, the lng market will usher in a new round of easing cycle, and international gas prices are expected to fall sharply. , providing strong cost support for the development of gas and electricity. according to china petroleum forecast data, during the "15th five-year plan" period, the average spot prices of henry hub in the united states, ttf in the netherlands, and lng in northeast asia will drop to us$2.8-3.5/mmbtu (million british thermal units), us$8-10/mmbtu, and us$9-9. us$11/mmbtu, down 3%-23%, 41%-53%, and 35%-46% respectively compared with the "14th five-year plan".

however, at the practical level, downstream companies are faced with the dilemma of low utilization hours of gas turbine units and difficulty in making profits. xing zheng, deputy general manager of the integrated energy service division of china huadian group clean energy co., ltd., said at the sharing meeting that the average utilization hours of gas-fired power units nationwide in the past ten years has been around 2,500 hours, among which shanghai and zhejiang are mainly used for peak load regulation. the average utilization hours of heavy-duty gas turbine units in other places will be less than 2,000 hours in 2023. according to a research report by tianfeng securities, this data is far lower than that of countries and regions with more mature gas and electricity development. for example, the average utilization hours of gas power units in japan and the united states from 2013 to 2021 are as high as 5,394 hours and 3,027 hours.

as a result, gas-fired power generation accounts for a low proportion of total domestic power generation. tianfeng securities analyst guo lili said that in 2023, the proportion of national gas-fired power generation in the country's total power generation will increase to 3.2%, reaching 297.2 billion kilowatt hours, but there is still a certain gap compared with the global natural gas power generation accounted for 23%.

at the same time,due to the imperfection of the current market mechanism, it is difficult to channel the cost of gas, electricity and fuel to the consumer side, and it is easy to cause an inversion in the cost of power generation and the price of power supply.especially in areas where a single electricity price system is implemented, gas and electricity companies face greater difficulties in their operations. a tianfeng securities research report shows that affected by geopolitical conflicts and international gas prices fluctuating at high levels, the procurement costs of gas and power companies such as guangdong electric power and zhejiang energy changxing thermal power will increase by more than 70% in 2023 compared with 2020, resulting in companies' annual electricity net losses in recent years. profits fell rapidly.

accelerate the marketization of gas and electricity

“the situation of gas power in the domestic power system is rather embarrassing.” many people in the industry describe it as “squeezed from both ends.”

my country's natural gas is highly dependent on foreign countries. therefore, the upstream gas source side faces risks of high gas price fluctuations and rising costs, as well as energy supply security issues. a person in the gas and power industry said that compared with the united states, a major natural gas exporter, the cost of natural gas power generation in china is three times as much.

on the downstream user side, gas and electricity companies have to bear the pressure of high costs that are difficult to decentralize. according to the "notice on regulating issues related to the management of on-grid prices for natural gas power generation" (fagai price [2014] no. 3009), "the specific price level of natural gas power generation shall be determined by the provincial price authority after comprehensive consideration of the cost of natural gas power generation, social benefits and user affordability" "; in may 2021, the national development and reform commission issued a solicitation for opinions on changing the benchmark on-grid price mechanism for natural gas power generation to a two-part market-based price formation mechanism of "electricity price + capacity compensation". however, the official document has not yet been released, and gas and electricity prices appear " "one province, one policy" feature. xing zheng said that the operating conditions of areas such as jiangsu, zhejiang and shanghai that implement the two-part electricity price system are significantly better than those in hebei, hubei and other areas that implement a single electricity price system.

according to industry insiders, as the national electricity market reform accelerates, market-oriented transactions in natural gas power generation are the general trend. however, the first challenge for gas-fired power to enter the market is that the variable cost of gas-fired power generation is high, and compared with coal-fired power units, power competition is at a disadvantage. therefore, industry insiders believe that in market-based transactions, the advantages of gas and electricity peaking and frequency regulation and clean and low carbon should be restored.

but according to xing zheng, currentlythe two-part electricity price that gas and electricity should enjoy as a regulated power supply is not fully covered, and it is difficult for most companies to recover the cost of gas supply. at the same time, the spot pilot areas have set a gas and electricity price ceiling (or "price cap"), which is far lower than compared with mature foreign power markets, the scarcity of natural gas power generation cannot be reflected.

"the overall marketization of natural gas power generation is still in the exploratory stage, and the current market mechanism is not perfect enough. the development of gas power cannot be separated from the support of subsidy policies." xing zheng introduced that huadian group's market-based trading of natural gas power generation in 2023 accounted for 27.6%, most of which government pricing is still implemented.

in order to solve the above problems, xing zheng suggested that in the medium and long-term power market, promote the full coverage of the gas and electricity two-part electricity price policy to achieve effective recovery of fixed costs from capacity electricity prices; increase the spot market price cap in the electricity spot market to reflect the benefits of gas and electricity scarcity encourages the market to invest in peak-margin units; in the ancillary service market, it enriches ancillary service transaction types such as frequency modulation, backup, and rapid ramping. at the same time, it is necessary to strengthen the guidance of gas power development planning, further clarify the positioning and development direction of natural gas power generation in the new power system, promote the coordinated development of gas power and new energy, establish a coordinated operation model with photovoltaic and wind power, and develop multiple projects in an orderly manner according to local conditions. it can complement projects and participate in the coordinated dispatching mechanism of multiple energy varieties.