The two major power grids jointly promote the reform of electricity and reduce the cost of users
The latest data highlights the growing impact of the new wave of reform policies, with early signs of reform dividends becoming evident. In 2017, both State Grid Corporation of China and China Southern Power Grid significantly reduced users' electricity costs—by 103.2 billion yuan and 54.5 billion yuan respectively. During the same year, State Grid completed system reforms across 21 secondary units and 123 lower-level units, while South China Power Grid successfully implemented ownership reforms for 138 state-owned enterprises, marking tangible progress.
In response to the demands of the new era, both major grid companies have set ambitious strategic goals. State Grid aims to become a world-class energy internet company with strong competitiveness, while South China Power Grid is working toward building a globally competitive enterprise. To achieve these targets, both companies have emphasized the importance of deepening reforms, aligning with market-oriented principles, and focusing on supply-side structural reforms. As stated by State Grid’s President Shu Yinyu at the 2018 work conference: “To build a world-class energy internet company, we must enhance our reform awareness, follow the reform trend, focus on supply-side structural adjustments, and ensure that reform measures are effective.â€
Electric power reform has already shown positive effects in reducing user costs. The first corporate social responsibility report of the new era from State Grid revealed that the company continued its power sector reforms in 2017, promoting the development of incremental power distribution, launching mixed-ownership and power sales companies, and exploring market-based solutions to address the issues of wind, solar, and hydro power curtailment. Additionally, State Grid collaborated with the National Development and Reform Commission to implement cross-regional and inter-provincial power transmission pricing reforms, completing provincial grid transmission and distribution pricing.
Data shows that the total trading volume of power trading organizations reached 4,046.7 billion kWh, with market transactions amounting to 12,095 billion kWh. Through tariff approvals, expanded direct annual trading, and the elimination of urban utility surcharges, users saved 73.7 billion yuan in electricity bills, while direct transactions helped reduce costs by an additional 29.5 billion yuan.
As a testing ground for electric power reform, South China Power Grid has focused on supply-side structural reforms over the past five years, releasing significant reform dividends. In 2016 and 2017, it reduced electricity costs for users in the five southern provinces by 28.2 billion and 54.5 billion yuan, respectively. The company also implemented provincial tariff reforms, promoted cross-provincial transmission pricing, and contributed to national pricing reforms. In 2017, the region saw 268 billion kWh of market-based transactions, accounting for 30.1% of South China Power Grid's total sales.
Strong organizational support is essential for successful structural reforms. The corporate system, as a modern enterprise model, helps define roles between investors, board members, supervisors, management, and party organizations, ensuring efficient decision-making. With the completion of corporate system reforms in 2017, both State Grid and South China Power Grid are better positioned to establish market-driven operations, enhancing their efficiency and growth potential.
Looking ahead, State Grid will continue to advance electric power reform, aligning with the Communist Party’s 19th National Congress spirit and central government directives. The company plans to complete inter-provincial grid transmission price verification, expand market-oriented transactions, and promote a unified national power market. It will also work to break down regional barriers, improve trading mechanisms, and support clean energy consumption through policy initiatives.
South China Power Grid will deepen its reforms by continuing its "plan + market" trading model, leveraging channel capacity for provincial transactions, and improving water-electricity exchanges to boost clean energy use in western regions.
In addition, State Grid will push forward the reform of state-owned assets, focusing on mixed-ownership, audit systems, and collective enterprise reforms. It will streamline operations, enhance business integration, and promote marketization of non-regulated businesses. By implementing the “three systems†reform, the company aims to create flexible management structures where employees can move in or out based on performance, and incomes can fluctuate accordingly.
South China Power Grid will also accelerate internal institutional reforms and transformation, focusing on lean management and industrial restructuring to meet global competitiveness standards. These efforts reflect a broader commitment to innovation, efficiency, and long-term sustainable growth in the power sector.
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