Shanxi encourages the development of distribution networks within industrial parks, with pricing determined by market forces.

On September 30, the Shanxi Provincial Party Committee and the Provincial Government jointly issued a new document on power-sector reform, which boasts numerous notable highlights. The following points are particularly noteworthy:
First, the issuing authority. Unlike typical documents on power-sector reform, this document—titled “Notice of the CPC Shanxi Provincial Committee and the People’s Government of Shanxi Province on Issuing the ‘Implementation Opinions on Supply-Side Structural Reform in the Power Sector’” (Jin Fa [2016] No. 35)—was issued by the CPC Shanxi Provincial Committee. The joint issuing bodies are the CPC Shanxi Provincial Committee and the People’s Government of Shanxi Province. Issuing a document in the name of the Party committee and addressing the power sector specifically from the perspective of supply-side structural reform is, to our knowledge, a first in China. This alone underscores that Shanxi Province has elevated its commitment to power-sector reform to an unprecedented level—undoubtedly welcome news for the ongoing reform process.
Second, the reform objectives. The “Opinions” focus on advancing supply-side structural reform in Shanxi’s power sector, with a clearly defined goal: “reducing electricity costs.” This objective is emblematic, reflecting the stance of local governments that are vigorously promoting power-sector reform, and it aligns with the fundamental imperative of cost reduction. It appears that lowering electricity prices will remain the primary policy goal for the foreseeable future.
Third, the content of the document itself. Compared with previously issued documents, the provisions in these “Opinions” are also highly noteworthy. For example, optimizing the spatial distribution of coal-fired power generation, stepping up transmission and distribution infrastructure within provinces, carrying out energy‑saving upgrades at coal‑fired power plants, and allowing directly traded power plants to reach their designed utilization hours—all contain points that merit close attention. However, in comparison, the following statements may inspire even greater anticipation:
Regarding the park’s distribution network, the “Opinions” clearly state: “Taking the aluminum recycling industrial park as a pilot, we will attract social capital and adopt market‑based approaches to build a park‑level distribution network centered on incremental distribution grids. We will establish an operation model in which self‑owned power plants assume social responsibilities and market forces determine regional distribution‑grid prices, thereby ensuring low‑cost, convenient, and reliable power supply for the park and fostering the stable and sound development of Shanxi’s aluminum industry.” Note the key terms—“social capital,” “incremental distribution grid,” “self‑owned power plant,” and “generation‑supply‑consumption model”—which, taken together, suggest that the park‑level distribution network could be financed by social capital, with self‑owned power plants supplying electricity to electrolytic aluminum and other enterprises within the park, while enjoying autonomous control over pricing.
Regarding coal‑power integration and partnerships with high‑energy‑consumption enterprises, the “Opinions” both encourage deepening coal‑power joint operations and introduce corresponding policies: for integrated coal‑power enterprises in which the coal mine and the power plant are under the same entity, electricity used by the coal mine and the coal‑washing plant may be included within the scope of the affiliated power plant’s own‑use electricity. At the same time, the policies also promote collaboration between coal‑power entities and high‑energy‑consumption firms: when such coal‑power–high‑energy‑consumption partnerships are consolidated under a single investment entity, the electricity consumed by the high‑energy‑intensive project is counted as part of the affiliated power plant’s own‑use consumption; once the generating units have met their own‑use load, any surplus capacity may participate in market‑based trading. In short, captive power plants can maximize self‑consumption for internal use, with any excess power available for grid‑sale—effectively addressing the key concerns that have long constrained the development of captive power generation.