(Yicai) Oct. 26 -- The Southern Regional Power Market, the first regional power market in China, has become operational, marking a new phase in the country’s power market reform and creating a fuller and fairer competitive environment for the 290,000 market participants in the region.

The Southern Regional Power Market covers Guangdong province, Guangxi Zhuang Autonomous Region, Yunnan province, Guizhou province, and Hainan province, according to a launch ceremony in Guangzhou on Oct. 24.

Since continuous settlement trial operation kicked off in June last year, power generators, electricity retailers, power consumers, new energy storage operators, virtual power plants, and other market players in the region have competed side by side. Coal-fired, hydropower, nuclear, wind, photovoltaic, and gas-fired power stations bid for grid connection under the same rules, with uniform clearing prices.

“As China’s first integrated regional power market, after more than one year of continuous settlement trials, the Southern Regional Power Market has withstood real-money trading and diverse operational scenarios,” Li Minhong, marketing director and general manager of the marketing department (customer service department) of China Southern Power Grid, said at the ceremony. “It makes up for the shortcomings of individual provinces in energy resource reserves, transmission corridors, and flexible regulation capacity.”

Practice has proven that allocating electricity, a special energy commodity, through market mechanisms is not only feasible and efficient, but also enables coordinated efforts between the visible hand of the government and the invisible one of the market, Li pointed out.

The cumulative traded electricity in the Southern Regional Power Market reached nearly 900 billion kilowatt-hours in the January to September period, accounting for more than 70 percent of the grid’s total electricity sales, according to market figures. The maximum single-day cleared electricity volume exceeded four billion kWh.

In addition, interconnection between the Southern Regional Power Market and power supply markets outside the region extends the influence of its price signals to other areas. Cross-region traded electricity hit a record high of over 19.4 billion kWh in the first nine months of this year.

Over the next five years, the Southern Regional Power Market will keep expanding the pool of eligible market participants and trading varieties internally, Yicai learned at the ceremony. In addition, it will broaden external cooperation by linking with Hong Kong and Macao, as well as other domestic regional power markets, and engage with markets along the Mekong River outside China.

Authorities will keep breaking category barriers for all types of participants, said Huang He, GM of China Southern Power Dispatch and Control Center. On the power generation side, participation models for new players will be expanded; on the demand side, access will gradually open to more consumers; and on the regulation resource side, new energy storage and other categories will be allowed to join spot and ancillary service trading, Huang noted.

The launch of the Southern Regional Power Market is far more than the rollout of a regional market, Xie Jingdong, professor at Shanghai University of Electric Power, told Yicai. It is a landmark achievement in building a unified national power market that will help create replicable and promotable institutional models, Xie stressed.

Editors: Tang Shihua, Martin Kadiev