China's Distributed Power Electricity Bill Settlement

China’s Distributed Power Electricity Bill Settlement

The following is the settlement of electricity bills according to the three operating modes of distributed power sources.

(1) “Full Internet access” method

  The “full-scale Internet access” method means that all the electricity generated by distributed power sources is sold to the grid, and they were not used for a while. In this case, the power grid purchases all the electricity generated by the power station at the local photovoltaic power generation benchmark on-grid tariff. The benefit of the distributed power generation is the benefit generated by the power generation on the grid (hereinafter referred to as the on-grid benefit).

Assuming that the user is located in Jiangsu Province, the distributed power generation will generate a total of 10000 kW·h a year. It will be put into operation before the end of 2017 and adopt the “full on Grid” operation mode. Since the user is in class III resource area of class III solar resource area in Jiangsu, the benchmark on grid price of photovoltaic power generation is 0.85 yuan / kW·h, then the user can obtain economic benefits of 10000 × 0.85 = 8 500 (yuan) every year.

If the distributed power source is put into operation in 2018, and the benchmark on-grid electricity price for photovoltaic power generation is 0.75 yuan/k W·h, the user can obtain economic benefits of 10 000 x 0.75 = 7 500 (yuan) per year.

This operation method is the least profitable among the three methods, and general distributed power sources do not use this method. Therefore, the National Energy Xinneng [2014] No. 406 document also refers to this type of operation, but this type of operation is basically excluded in the subsequent documents. Nowadays, distributed power sources generally adopt the method of “spontaneous self-use” or “spontaneous self-use, surplus electricity to go online”.

(2) “Spontaneous self-use” method

The “spontaneous self-use” method means that all electricity generated by distributed power sources is used for self-use, and no excess electricity is sold to the grid. The benefits of this approach are divided into two parts, one part is the distributed power generation subsidy given by the state and region (hereinafter referred to as the power generation benefit), and the other part is the electricity fee generated by the user’s normal use of the amount of electricity (hereinafter referred to as the electricity benefit).

Assuming that the user is located in Shanghai and has installed distributed power generation and generated 10000 kW · h power a year, the “self use” operation mode is adopted. When it is put into operation in 2017, the distributed power generation subsidy given by the state is 0.42 yuan / kW·h, and the local additional subsidy for distributed power generation in Shanghai is 0.4 yuan / kW·h, then the total power generation benefit is (0.42 + 0.4) × 10 000 = 8 200 (yuan).

Electricity benefit, calculated based on the Shanghai residential electricity price of 0.5 yuan/kW·h, the resulting benefit is: 0.5 × 10 000 = 5 000 (yuan).

Therefore, the total benefit of the user’s distributed power supply is 8 200 + 5 000 = 13 200 (yuan/year).

(3) “Spontaneous self-use, surplus electricity to the Internet” method

“Spontaneous self-consumption, surplus electricity to the grid” means that the electricity generated by distributed power sources is mainly used by users themselves, and the excess electricity is fed into the grid. The user hopes that the generated electricity can be consumed internally as much as possible, and if it can’t be used, it can be sent to the grid so as not to waste this part of the photovoltaic power. The benefits generated by this method are divided into three parts, power generation benefits, electricity consumption benefits and grid-connected benefits.

Suppose that the user is an industrial and commercial user, located in Yancheng, Jiangsu, and uses Yancheng local real estate components to install distributed power sources. It was put into operation in 2018. A total of 10,000 kW·h of electricity was generated throughout the year, 7,000 kW·h was used for its own use, and the remaining 3,000 kW·h was connected to the Internet.

Power generation benefit: (0.37 (national subsidy) + 0.1 (subsidy for users using local components in Yancheng)) × 10 000 = 4 700 (yuan).

Electricity benefit (calculated at 0,8183 yuan/kW·h for industrial and commercial users): 0.8183 × 7 000 = 5 728 (yuan).

Internet access benefit: 0.391 (the purchase price of electricity on the Internet in Jiangsu Province) × 3 000 = 1 173 (yuan)

Therefore, the total benefit of this user’s distributed power supply is 4 700 + 5 728 + 1 173 = 11 601 (yuan/year).

Assuming that the distributed power generation is located in Jiangsu Province, the construction scale is 100 kW, the construction cost is 650,000 yuan, and the average annual power generation in the first 10 years is 125,000 kW·h. When calculating the benefits, the residential electricity price is 0.5783 yuan/kW·h, which is less than 1kV and the annual electricity consumption is in the range of 2 760 kW·h to 4 800 kW·h; the general industrial and commercial electricity use is 0.8183 yuan/kW·h when it is less than 1 kV. When calculating the electricity price of a large industry, it is assumed that the user’s production is concentrated between 8:00-21:00, and the average daily electricity price is (1.069 7×8+0.641 8×5)/13= 0.905 (yuan/kW·h).

The relationship between the different operating modes of the three users and the annual benefits is shown in Figure 1, Figure 2.

China's Distributed Power Electricity Bill Settlement
Figure 1 – Comparison of the annual benefits generated by the three users under different operating modes in 2018
China's Distributed Power Electricity Bill Settlement
Figure 2 – Comparison of the annual benefits generated by the three users under different operating modes after 2018

Among the three operating methods, the “full online” method is the least effective method, and the return on investment period is the longest. In the comparison of the other two modes of operation, as the proportion of self-consumption electricity increases, the annual benefits are increasing accordingly. Among the three types of users, the larger industry with the highest electricity price uses more electricity for its own use, and the greater its annual benefit. Under the operation mode of all self-generated and self-used, the cost can be recovered in about 4 years. The benefits of general industry and commerce are not as good as those of large industries, but they are stronger than the benefits of ordinary residents. Distributed power sources built by ordinary residents can generally recover the cost in about five or six years.

From the perspective of the time of operation, the benefits of distributed power sources put into operation after January 1, 2018 are slightly lower than those of distributed power sources put into operation before, so the investment payback period is also longer. Distributed power sources put into operation before 2018 can basically recover their costs within 6 years, but for distributed power sources put into operation after 2018, the longest return on investment period is almost 7 years. It can be seen that the “Notice of the National Development and Reform Commission on the Price Policy of Photovoltaic Power Generation Projects in 2018” issued on December 19, 2017 (Fagai Price Regulation [2017] No. 2196) will still have some impact on the development of distributed power generation.

To sum up, users need to consider their own electricity consumption when considering their operation methods. The higher the price of their own electricity and the more electricity they use, the more significant the power generation benefits of distributed power generation will be, and the shorter the payback period will be.