Newly issued pumped storage power station price policy

In order to promote the healthy development of pumped-storage power stations and give full play to the comprehensive benefits of pumped-storage-storage power stations, the National Development and Reform Commission recently issued the “Circular on Issues Concerning the Improvement of the Price Formation Mechanism for Pumped Storage Power Stations”.

The "Notice" made it clear that before the formation of a competitive electricity market, the two-part tariffs for pumped storage power stations were implemented. Among them, the capacity electricity price compensates for fixed costs and permitted revenue, and proceeds are determined based on the risk-free rate (long-term Treasury interest rate) plus 1-3 percentage points of the risk rate of return. The electricity price compensates for variable costs such as pumping losses; gradually pumping water for new production. The storage power station implements the benchmark capacity electricity price; the capacity price and the loss of the power station are included in the unified calculation of the local provincial grid operating expenses, and is taken into consideration as an adjustment factor of the sales price.

The "Notice" emphasized that pumped-storage power stations should be uniformly planned, rationally laid out, and orderly constructed, and projects that are not included in the national election planning and related construction plans must not be constructed; and the supervision and assessment of the operation of pumped-storage power stations should be strengthened. Pumped storage power stations and power grid companies that can make full use of the power should check their responsibilities and punish them.

The "Notice" proposed that areas with conditions to encourage the use of bidding, market bidding and other methods to determine the owner of the pumped storage power station project, electricity and electricity prices.

After the above-mentioned policies are issued, they will be conducive to the introduction of social capital investment in the construction of pumped-storage power stations and will play a positive role in improving the utilization efficiency of power stations.