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Circular on 2022 risk and early warning for coal power planning and construction
Original title: 国家能源局关于发布2022年煤电规划建设风险预警的通知 国能发电力〔2019〕31号
Links: Source document (in Chinese) (link). . Same document for other years: (2023) (2022) (2021) (2020).
NEA Power generation [2019] No. 31
NEA Circular on 2022 risk and early warning for coal power planning and construction
各省、自治区、直辖市、新疆生产建设兵团发展改革委（能源局）, 各派出能源监管机构，中电联，国家电网公司、南方电网公司，华能、大唐、华电、国家电投、国家能源集团公司，中咨公司、电力规划设计总院：
为深入学习贯彻习近平新时代中国特色社会主义思想，全面贯彻党的十九大和十九届二中、三中全会精神，认真落实中央经济工作会议精神，在巩固、增强、提升、畅通上下功夫，巩固化解煤电过剩产能工作成果，增强电力（热力）供应保障能力，支持地方脱贫攻坚，助力打底蓝天保卫战、北方地区清洁供暖，提升煤电清洁高效、高质量发展水平，按照（关于推进供给侧结构性改革防范化解煤电产能过剩风险的意见》（发改能源[2017) 1404号）等文件要求，国家能源局会同相关单位进一步完善了2022年煤电规划建设风险预警机制。Currently notice is given of the following。
1. The risk and early warning indicator system for coal-fired power planning and construction is divided into indicators for economics, redundancy of installed capacity, and resource constraint indicators。Of these, the indicator for redundancy of installed coal-fired capacity is a binding indicator, which reflects the local overcapacity of coal-fired power generation capacity and power supply；the resource constraint indicator is a binding indicator, reflecting the local feasibility of planning and building coal-fired power projects；the economics indicator of coal power construction is a guiding indicator, which reflects the local economics of building coal-fired power projects for local power consumption, and provides decision-making reference for planning and construction of coal power projects。
2. The indicator for redundancy of installed coal-fired capacity refers to the 2022 over-capacity at the level of a province, autonomous region, or directly controlled municipality, and is divided into three levels of red, orange, green。A red warning is issued when there is obvious redundancy in the installed capacity of coal-fired power, and the power system backup rate is exceedingly high；an orange warning is issued when the installed capacity of coal-fired power is abundant, and the power system backup rate is leaning towards being high；a green warning is issued when power supply and demand are basically balanced or if there is a shortage, and the power system backup rate is appropriate or relatively low。The calculation method, and the reference for power system backup rates for each province, autonomous region, and directly-controlled municipality can be seen in Annex 1 and 2。
3. The resource constraint indicator is based on constraints in terms of emissions of pollutants to air, of water resources, of total coal consumption, and other related resources in each province, autonomous region, or municipality. The indicator is divided into two levels, red or green。For the areas identified in the "Notice on the Three year plan of action for winning the war to protect blue skies" (State Council [2018] No. 22) as key areas, a red warning is issued for the resource constraint indicator；the rest is green。The resource constraints results for each province, autonomous region, and directly-controlled municipality are shown in Annex 3。
4. The early warning indicator for the economics of coal-fired power construction is based on the expected return on investment of new coal-fired power projects with intended consumption of power within the respective province, autonomous region and directly-controlled municipality in 2022, and is divided into three levels: red, orange, and green。A red warning is issued when return on investment is lower than the current interest rate on medium to long-term national bonds；an orange warning is issued when return on investment is between the current interest rate on medium to long-term national bonds and a normal rate of return (generally 8% for power generation projects)；a green warning is issued when return on investment exceeds the normal rate of return。For the calculation method and early warning results for expected return on investment for coal-fired power generation projects, see Annex 4 and 5。
5. In order to do a good job at the planning and construction of coal-fired power in 2019, in accordance with the principle of orderly development, guide the approval and construction of coal-fired power projects with intended consumption electricity within the respective province, and which are included in the national power generation construction plan。
(1) Administrative areas with red or orange results for the redundancy of installed capacity indicator, are required to postpone approval and construction of coal-fired power projects with intended consumption electricity within the respective administrative area (including auto-producer coal-fired power plants, the same below), and shall reasonably arrange the construction schedule of coal-fired power projects already under construction. In principle, no new investment in coal-fired power projects with intended consumption electricity within the respective province shall be arranged, and only if there are true requirements, orderly and appropriately arrange a coal-fired emergency power supply reserve。
(2) Administrative areas with green results for the redundancy of installed capacity indicator, after priority is given to the use of renewable power and projects for inter-provincial exports have been utilized for mutually cost-effective and short-term balancing purposes, and after having strengthened demand side management, and still cannot satisfy power demand, shall implement relevant national policy requirements on land, environmental quality, and water conservancy, and solicit opinions from local branches of the energy regulatory agencies, and orderly approve and construct coal-fired power generation projects with intended consumption electricity within the respective province；and under the same conditions provide priority approval and allow priority construction start of poverty alleviation projects, residential co-generation of heat and power, integrated coal mining and coal-fired power operations, as well as for necessary supporting grid infrastructure and industrial park supporting infrastructure。
装机充裕度指标为绿色、资源约束指标为红色的地区，在落实上述要求的基础上，需进一步落实《行动计划》等相关文件要求，严格控制新核准、新开工建设煤电项目规模。
（三）对于按照上述要求确需核准、开工建设省内自用煤电项目的省份要遵循有序适度原则合理安排时序，避免集中核准、集中开工；密切跟踪电力（供需）形势变化，合理控制建设节奏，防范出现新的煤电产能过剩。
5. In the case of major changes in the power supply and demand situation, of coal prices, of electricity prices, of other key conditions, or the introduction of relevant major policies, an update to the risk and early warning results will be provided in a timely manner and revised annexes will be issued。
Notice is hereby given
Annex：1. Reference level backup rates for provinces, autonomous regions, and directly-controlled municipalities
2. 2022 Redundancy of installed generation capacity
3. 2022 Resource constraint indicator
4. Calculation method for expected return on investment for coal-fired power generation projects
5. 2023 economics early warning indicator
Results based on method provided in the document establishing the coal investment risk monitor (link). Map below is last years result, added for comparison.
Annex 1
Provincial (autonomous region, city level) reference power system backup rates
| No. | Area | Reasonable backup rate | Green zone | Orange zone | Red zone | |
| 1 | Heilongjiang | 15% | ≤17% | 17-18% | >18% | |
| 2 | Jilin | 13% | ≤15% | 15-17% | ≥17% | |
| 3 | Liaoning | 13% | ≤14% | 14-17% | ≥17% | |
| 4 | Inner Mongolia | Inner Mongolia (East) | 15% | ≤21% | 21-23% | ≥23% |
| 5 | Inner Mongolia (West) | 15% | ≤16% | 16-22% | ≥22% | |
| 6 | Beijing | 15% | – | – | – | |
| 7 | Tianjin | 15% | ≤19% | 19-23% | ≥23% | |
| 8 | Hebei | Northern Hebei | 13% | ≤15% | 15-17% | ≥17% |
| 9 | Southern Hebei | 13% | ≤14% | 14-17% | ≥17% | |
| 10 | Shandong | 13% | ≤14% | 14-17% | ≥17% | |
| 11 | Shanxi | 13% | ≤15% | 15-18% | ≥18% | |
| 12 | Shaanxi | 13% | ≤15% | 15-18% | ≥18% | |
| 11 | Gansu | 13% | ≤16% | 16-18% | ≥18% | |
| 14 | Qinghai | 13% | ≤15% | 15-20% | ≥20% | |
| 15 | Ningxia | 15% | ≤18% | 18-22% | ≥22% | |
| 16 | Xinjiang | 15% | ≤17% | 17-21% | ≥21% | |
| 17 | Henan | 14% | ≤15% | 15-18% | ≥18% | |
| 18 | Hubei | 14% | ≤16% | 16-20% | ≥20% | |
| 19 | Hunan | 14% | ≤16% | 16-19% | ≥19% | |
| 20 | Jiangxi | 14% | ≤18% | 18-21% | ≥21% | |
| 21 | Sichuan | 14% | ≤15% | 15-17% | ≥17% | |
| 22 | Chongqing | 15% | ≤17% | 17-20% | ≥20% | |
| 23 | Tibet | – | – | – | – | |
| 24 | Shanghai | 15% | ≤17% | 17-19% | ≥19% | |
| 25 | Jiangsu | 12% | ≤13% | 13-17% | ≥17% | |
| 26 | Zhejiang | 12% | ≤13% | 13-17% | ≥17% | |
| 27 | Anhui | 12% | ≤14% | 14-18% | ≥18% | |
| 28 | Fujian | 12% | ≤14% | 14-18% | ≥18% | |
| 29 | Guangdong | 13% | ≤14% | 14-18% | ≥18% | |
| 30 | Guangxi | 13% | ≤15% | 15-18% | ≥18% | |
| 31 | Yunnan | 13% | ≤15% | 15-18% | ≥18% | |
| 32 | Guizhou | 13% | ≤15% | 15-18% | ≥18% | |
| 33 | Hainan | 20% | ≤25% | 25-30% | ≥30% | |
Note：Green zone：The actual power system backup rate is not higher than the reasonable backup rate, or does not exceed the reasonable backup rate by more than the equivalent of a single local large-scale coal-fired power generation unit；
Red zone：The actual power system backup rate exceeds the reasonable backup rate by the equivalent of more than the local demand growth in a single year； Orange zone：The actual power system backup rate is between the red and green zones
北京、西藏未来不发展煤电，未测算其煤电规划建设风险预警情况
附件2,3,5 [Put into one table by China Energy Portal]
2022 Economics early warning indicator
2022 Installed capacity redundancy situation
2022 Resource constraint situation
| No. | Area | 2022 Installed capacity redundancy situation | 2022 Resource constraint situation | 2022 Economics early warning indicator | ||
| 1 | Heilongjiang | Red | Green | Green | ||
| 2 | Jilin | Red | Green | Green | ||
| 3 | Liaoning | Orange | Green | Green | ||
| 4 | Inner Mongolia | Inner Mongolia (East) | Red | Green | Green | |
| 5 | Inner Mongolia (West) | Green | Green | Green | ||
| 6 | Beijing | – | Red | – | ||
| 7 | Tianjin | Green | Red | Red | ||
| 8 | Hebei | Northern Hebei | Green | Key areas | Red | Green |
| Other areas | Green | |||||
| 9 | Southern Hebei | Green | Red | Green | ||
| 10 | Shandong | Red | Key areas | Red | Red | |
| Other areas | Green | |||||
| 11 | Shanxi | Red | Key areas | Red | Green | |
| Other areas | Green | |||||
| 12 | Shaanxi | Green | Key areas | Red | Green | |
| Other areas | Green | |||||
| 11 | Gansu | Red | Green | Red | ||
| 14 | Qinghai | Green | Green | Red | ||
| 15 | Ningxia | Red | Green | Red | ||
| 16 | Xinjiang | Red | Green | Green | ||
| 17 | Henan | Green | Key areas | Red | Orange | |
| Other areas | Green | |||||
| 18 | Hubei | Green | Green | Green | ||
| 19 | Hunan | Green | Green | Green | ||
| 20 | Jiangxi | Green | Green | Red | ||
| 21 | Sichuan | Green | Green | Red | ||
| 22 | Chongqing | Green | Green | Green | ||
| 23 | Tibet | – | Green | – | ||
| 24 | Shanghai | Green | Red | Green | ||
| 25 | Jiangsu | Green | Red | Green | ||
| 26 | Zhejiang | Green | Red | Green | ||
| 27 | Anhui | Green | Red | Red | ||
| 28 | Fujian | Orange | Green | Orange | ||
| 29 | Guangdong | Green | Green | Green | ||
| 30 | Guangxi | Green | Green | Red | ||
| 31 | Yunnan | Green | Green | Red | ||
| 32 | Guizhou | Green | Green | Green | ||
| 33 | Hainan | Green | Green | Green | ||
Note：重点区渝是指《关于印发打盔蓝天保卫战三勒于动计划的通知》〔国发(2018) 22号〕确定的重点区域
北京、西藏未来不发展煤电，未测算其煤电规划建设风险预警情况
Annex 4
Calculation method for expected return on investment for coal-fired power generation projects
klr = [(P– Rca×Pca/106) Tv / CE– (kzj+r×kll+kcb)]/ (1-r)
In which, klr：Return on capital investment for coal-fired power project；
P：Coal-fired power project's electricity price (excluding tax) (in RMB/kWh)；
CE：Dynamic investment per kilowatt (in RMB/kW)；
Tv：Expected annual utilization hours (unit: hours)；
kzj：Depreciation rate; using a 20 years depreciation period, use 5%；
r：Share of loans in total investment; generally 80% for power projects；
kll：Interest rate on the loans；
kcb：Operating cost rate; ratio of total annual operating costs versus total investment, including maintenance costs, wages, benefits and insurance for personnel, material costs, other costs, etc.。ForKcbtake 2.5% as a benchmark for preliminary calculation of the rate of return on investment for a typical coal-fired power project；Then, enter this preliminary rate of return on investment into the formula：Kcb = 0,0737 × preliminary rate of return on investment for the project + 0,0118. This is the recommended value for Kcb to be used in this specific project。
Rca：Coal consumption of the generation unit (in g/kWh)；
Pca：Expected standard coal price (including tax), in RMB/ton. Determined by reference to China's coal price index the past three years (converted to standard coal eq. at 7,000 kcal/kg) and by weighting with 0.5, 0.3 and 0.2, respectively。
