trivium cory combs --andrew polk ---- when it became unprofitable to produce power - generators went into shutdown/mainteace mode powe pricing mismatch
unusaual ne wealther expedited demand
powe5r cris china both predictive/predictable- mistmach cola needs winter 2021
this does not mean china environmental policy was mistaken- the policies been in place for 6 years - so they are not the sudeden cause across the 4 provinnces - demand mismanagement
screwed up on daily supply (trying too hard long term poloicy)
dmeand management lot tailored locally - problem with that is some local incentives /ptovinces had aowed illegal (non green) production to make local economic numbers - cant control supply but can shot demand - falure of bottom-up meeting top-dowm (polticallysafe to exagerate green policy caused the problem instead of local bad delivery)
=============now weknow problem whqts response
ramp up domesticoalpeoducrion -fast track mine approvals - modesly successful (missing about 20% of production eed)
fix pricing mismatch -cia; had been to expensive to generate with - so use the cial you have by fixing price issue
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electricity pricing sdet up medium term
andy chen
players state owned generators
private coal market suppliers - benchmark fluctuation method- price ceiling/floor 10% above and 15% below local becmhmark proce situation in 2019
plan for 2020 - only alow to fluctuate downward from benchmark
but now in 2021 ndrc has ended it manadate price can only be leow bencmark - helping hand business post covid - squeezed were coal-fire generators closing to maintenace mode- have the coal but not using it due to pricing mix
crisis mismatch understood by end of september
so reinstated 10% above permitted - hunan did this first then guandong , shanghai, inner mongolia but or enough
so oct 8 top level meeting premier number 2 guy - decided 10% up cap not enough - now ler plus 20% up/down cap oct11 ndrc in line with premier 12th press conference
so all coal fire f=generators will be open mqarket - currently state buys 30% of market at huge discount
3rd thing market trade eetocity prices for high energy user may have to pay ,ore than 20% cap- increaseed cosrs bit energy users
also spot prices not bounded by any limitations
put more commecrce buyrrs ito open market - protect some agricultute/ ngo networks
generally prices now open mrlet for geneatps
on demand side bring down excessive use by commerce
last friday policdy ito effect- 20% rise price -- and 50% risev in oneregion - tells use electricity was highly undepriced
its not anbpour env9rvonmental policy
core wasstate controlledstate pricing - that has npw been remo0ved - thus cerisos likely to dissipate
q1 will all this contiue or just short-term inyervention
no end date to fridays new policy -so likely to stay
move all of chia trdibg to spot markets but this is just start ndrc state owned grid companies will have to change- odered by number 2 in command ie pemier
might be some back-peddling later if electricity becomes ample - nb this reform has let price vary more downb as well as up- so no logical reason why monoply pricers return
q2 whar inoacrs of winter or more coal on environmental po;icy
i think china remains committed to overall goal- each peak emissions before 2030; reach carbon zero by 2060
responses are logical- winrer21 doesnt have enoygh coal; and will look to fix this
think about it- colal was expected to rise throigh to 2025 - dacroedinto to decarbonisation policy
peking wants orderly decarbonisation - one that doesnt decastabilise markets- gradual/commot transforamtion od energy security
wier2021 immediate crisisresponce4 does not impact long term policy as far as china leaders are conernced- narural to expect bubps on chinas road to decarbonisation
q3so how does renewable energy fitin- yes& no
supply diversication is the future answer integral to 14th five year plan- we'll see 7 sectorvspecifc plans coal elecricirtrenewables.. ro be released... issues boost in battery storage renewables; regional issues where mass poulation demands are--- net net 6this crsis wnr slow down innovation in china enegy
insia'scoal crunch probably wose --
winter 21- geeting more coal out of ground - not really
residentl heating will be a prority esp neast
expect some industrial rationing
ochina imports 10% of coal needs- australia 2.3% - so will change current trade war- probably not
lng will keep rising but not main solution to crisis 2021
anticipate industrial power rationing but logivally- not unique to chyina-whole region -nno may be best prepared od most asian redions with winter
nuancerussia question - role china amd mongolia play - more mongolian coal
does nuclear fit into future? cory combs - world ove waitong dor next leap in tech - china building 14 new plants but havent found best nuclear yey-- energy storage is liklely to be a quicker so9lurion - still waiting for nuclear leap
question andy chen- storage wind - whats new-- required at used side by bif factories - store when cheap;;but a year ago local goverments joined the push and connection with wind/solar farms - some local govs rwquiring 25% storage capacity of farm's generation - thatvwill add cost to renewable generators if you piush it- problem is will grid take responsinility - generation versus grod versus local reg
