Thursday, October 28, 2021

reality of energy china criss winter 2021- trivium clarifes china winter2021 crisi all over n asia; china now ahead in implications; also inevitable more china-russia friendship ch germany-russia

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


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 

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