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Risk and early warning report for 2020 coal-fired power planning and construction
Original title: 国家能源局关于发布2020年煤电规划建设风险预警的通知 国能电力[2017]106号
Links: Original source (in Chinese) (link). Same document for other years: (2023) (2022) (2021) (2020).
National Energy Administration, Dept. for electric power [2017] No. 106
National Energy Administration
Circular on the publication of the Risk and early warning report for 2020 coal-fired power planning and construction
To Development and Reform Commissions (Energy departments) of provinces, autonomous regions, directly-controlled municipalities, XPCC, regulatory agencies of branches of the National Energy Administration, CEC, State Grid Corporation, China Southern Power Grid Corporation, Huaneng, Datang, Huadian, Guodian, Guodian Investment Group, Shenhua Group, China National Coal Group, SDIC, China Resources Group, China International Engineering Consulting Corporation, Power Planning and Design Institute：
In recent years, with China's economic development entering a 'new normal', the growth rate of electricity consumption is slowing, and the coal-fired power industry is facing issues of continuously declining number of hours of utilization, planning and construction exceeding demand, and other issues。To guard against and resolve risks of overcapacity and promote the orderly development coal-fired power production, the National Energy Administration, in conjunction with the relevant departments, established and improved the risk and early warning mechanism for coal-fired power planning and construction。Currently notice is given of the following：
1. The risk and early warning mechanism for coal-fired power planning and construction is divided into an indicator for the economics of coal-fired power construction, an indicator for the redundancy of installed capacity of coal-fired power, and a resource constraint indicator。Of these, the indicator for the economics of coal-fired power construction is an advisory indicator, reflecting the financial conditions for the construction of local coal-fired power generation projects, providing a reference for decision-making for planning and construction of coal-fired projects to power generation enterprises；the early warning indicator for the redundancy of installed capacity of coal-fired power and the resource constraint indicator are binding indicators, and reflect the feasibility of building a local coal-fired power generation projects。The final risk warning result is determined by the highest level of the binding indicators。The early warning results are divided into three levels, from high to low, as red, orange, and green。
2. The early warning indicator for the economics of coal-fired power construction is based on the expected return on investment for coal-fired power projects newly put into operation in 2020 in different provinces (autonomous regions, municipalities), and is divided into three levels of 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。The calculation method for the expected return on investment in coal-fired power generation projects is included in Annex 1。
3. The early warning indicator for the sufficiency of installed capacity of coal-fired power is based on the 2020 power system backup rate in different provinces (autonomous regions, municipalities), and is divided into three levels of red, orange, and 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。Reference levels for power system backup rates in different provinces (autonomous regions, cities) is included in Annex 2。
4. The resource constraints indicator is based on the provinces' (autonomous region, municipalities) air pollutant emissions, water resources, total coal consumption and other related resource conditions, and is divided into two levels of red and green。A red warning is issued in case of serious air pollution, water shortages, or an urgent need of control of total coal consumption, or when other resources constrain the planning and construction of coal-fired power projects；the rest is green。
5. For results of the 2020 provincial level Risk and early warning indicator for coal-fired power planning and construction, see Annex 3。In order to effectively and orderly prevent and resolve risks of overcapacity of coal-fired power generation capacity, and in accordance with the principle of appropriate strictness, those provinces who receive a red or orange warning result, shall temporarily suspend the approval and new construction of coal-fired power generation projects (including auto-consumer coal-fired units, same below), and under the guidance of the national government, reasonably schedule the timing of construction and coming into operation of coal-fired power generation projects that are under construction；those provinces who receive a green warning result shall also give full consideration to inter-provincial (regional) power exchange and other factors, and under the guidance of the state, orderly approve and start construction on coal-fired power generation projects。
6. In the event of relatively large changes to coal prices, electricity prices or other key conditions, or of introduction of major policies, the early warning results will be updated and published in a supplementary release。
Notice is hereby given。
Annex：1. Calculation method for expected return on investment for coal-fired power projects
2. Provincial (autonomous region, city level) reference power system backup rates
3. Risk and early warning report for 2020 coal-fired power planning and construction
National Energy Administration
April 20, 2017
Annex 1
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 (in RMB/ton, including tax). Determine 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, for the most recent to the last year included in the reference。Considering the abnormal fluctuations in coal prices in 2016, and considering the expected future trend of coal prices, in this calculation, appropriately increase the weighting of the coal prices in the fourth quarter of 2016 in calculating the average coal price for 2016。
Annex 2
Provincial (autonomous region, city level) reference power system backup rates
| No. | Area | Reasonable backup rate | Green zone | Orange zone | Red zone | |
| 1 | Heilongjiang | 13% | ≤17% | 17-19% | >19% | |
| 2 | Jilin | 13% | ≤15% | 15-18% | ≥18% | |
| 3 | Liaoning | 13% | ≤15% | 15-17% | ≥17% | |
| 4 | Inner Mongolia | Inner Mongolia (East) | 15% | ≤22% | 22-28% | ≥28% |
| 5 | Inner Mongolia (West) | 15% | ≤17% | 17-23% | ≥23% | |
| 6 | Beijing | 15% | – | – | – | |
| 7 | Tianjin | 15% | ≤19% | 19-23% | ≥23% | |
| 8 | Hebei | 13% | ≤16% | 16-19% | ≥19% | |
| 9 | Shandong | 13% | ≤14% | 14-18% | ≥18% | |
| 10 | Shanxi | 13% | ≤15% | 15-19% | ≥19% | |
| 11 | Shaanxi | 13% | ≤15% | 15-20% | ≥20% | |
| 12 | Gansu | 13% | ≤16% | 16-19% | ≥19% | |
| 11 | Qinghai | 13% | ≤15% | 15-20% | ≥20% | |
| 14 | Ningxia | 15% | ≤19% | 19-23% | ≥23% | |
| 15 | Xinjiang | 15% | ≤17% | 17-22% | ≥22% | |
| 16 | Henan | 14% | ≤15% | 15-21% | ≥21% | |
| 17 | Hubei | 14% | ≤16% | 16-23% | ≥23% | |
| 18 | Hunan | 14% | ≤17% | 17-22% | ≥22% | |
| 19 | Jiangxi | 14% | ≤16% | 16-23% | ≥23% | |
| 20 | Sichuan | 14% | ≤15% | 15-19% | ≥19% | |
| 21 | Chongqing | 15% | ≤18% | 18-23% | ≥23% | |
| 22 | Tibet | – | – | – | – | |
| 23 | Shanghai | 15% | ≤17% | 17-19% | ≥19% | |
| 24 | Jiangsu | 12% | ≤13% | 13-19% | ≥19% | |
| 25 | Zhejiang | 12% | ≤13% | 13-17% | ≥17% | |
| 26 | Anhui | 12% | ≤14% | 14-19% | ≥19% | |
| 27 | Fujian | 12% | ≤14% | 14-19% | ≥19% | |
| 28 | Guangdong | 13% | ≤14% | 14-18% | ≥18% | |
| 29 | Guangxi | 13% | ≤15% | 15-22% | ≥22% | |
| 30 | Yunnan | 13% | ≤15% | 15-17% | ≥17% | |
| 31 | Guizhou | 13% | ≤15% | 15-17% | ≥17% | |
| 32 | Hainan | 20% | ≤26% | 26-32% | ≥32% | |
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。
Annex 3
Risk and early warning report for 2020 coal-fired power planning and construction
| No. | Area | Early warning indicator for the economics of coal-fired power construction | Early warning indicator for the redundancy of installed capacity of coal-fired power | Resource constraint indicator | Risk and early warning indicator result for coal-fired power planning and construction | |
| 1 | Heilongjiang | Green | Red | Green | Red | |
| 2 | Jilin | Green | Red | Green | Red | |
| 3 | Liaoning | Orange | Red | Green | Red | |
| 4 | Inner Mongolia | Inner Mongolia (East) | Green | Red | Green | Red |
| 5 | Inner Mongolia (West) | Green | Red | Green | Red | |
| 6 | Beijing | – | – | Red | Red | |
| 7 | Tianjin | Orange | Red | Red | Red | |
| 8 | Hebei | Green | Red | Red | Red | |
| 9 | Shandong | Red | Red | Red | Red | |
| 10 | Shanxi | Red | Red | Green | Red | |
| 11 | Shaanxi | Green | Red | Green | Red | |
| 12 | Gansu | Red | Red | Green | Red | |
| 11 | Qinghai | Red | Red | Green | Red | |
| 14 | Ningxia | Orange | Red | Green | Red | |
| 15 | Xinjiang | Green | Red | Green | Red | |
| 16 | Henan | Green | Orange | Green | Orange | |
| 17 | Hubei | Red | Orange | Green | Orange | |
| 18 | Hunan | Green | Green | Green | Green | |
| 19 | Jiangxi | Green | Orange | Green | Orange | |
| 20 | Sichuan | Red | Red | Green | Red | |
| 21 | Chongqing | Red | Red | Green | Red | |
| 22 | Tibet | – | – | – | – | |
| 23 | Shanghai | Green | Red | Red | Red | |
| 24 | Jiangsu | Green | Green | Red | Red | |
| 25 | Zhejiang | Green | Red | Red | Red | |
| 26 | Anhui | Green | Orange | Green | Orange | |
| 27 | Fujian | Red | Red | Green | Red | |
| 28 | Guangdong | Green | Red | Red | Red | |
| 29 | Guangxi | Red | Red | Green | Red | |
| 30 | Yunnan | Red | Red | Green | Red | |
| 31 | Guizhou | Red | Red | Green | Red | |
| 32 | Hainan | Green | Green | Green | Green | |
Risk and early warning indicator result for coal-fired power planning and construction
[Map added by China Energy Portal]
