Daily Archives: April 17, 2011

Electricity wholesale price rise announced

Written by Paul Adkins

Last week, the NDRC announced a new round of price rises for on-grid electricity.   The rises vary province to province, with the biggest rise occurring in Shanxi province (0.026RMB/MwH) and an average across the country of 0.012RMB/MwH.

This rise affects only the price received by the power stations supplying power onto the national grid, and comes in light of higher coal prices.   Transmission, distribution and retail prices remain unchanged, though it would be foolish to rule them out.   The higher price will be absorbed by the grid companies, who no doubt will start lobbying to be allowed to pass it on.

For the primary aluminium industry, these rises will affect only those companies who buy from the grid, though most have long-term contracts or direct purchase contracts in place.   With metal prices sitting above the break-even line for some time now, at least the smelters can bear the cost increase, even if they seek to pass it on to the market.

The announcement does not name all the provinces affected, but among those that are named, there is no mention of the “gun” provinces – those that are home to the biggest capacity increases.   It is unlikely that provinces such as Xinjiang, Gansu, Inner Mongolia, Qinghai or Ningxia will feel the effects of this rise.

In Xinjiang alone, there is 10 million tonnes of new capacity being built over the next several years.