Deregulating The Dragon

China’s Energy Sector During the 2018 Chinese New Year

Amidst the Chinese New Year celebrations, on February 16th, 2018, optimism and energy are in the air, especially in China itself. So then, let’s take a look at how the Chinese deregulation efforts have been faring and what’s in store for the world’s largest energy market during the Year of the Dog — and, of course, how recent developments could impact Restart Energy’s projected 2021 Chinese energy market penetration.

First of all, the recently-published full-year growth figures show that China’s GDP grew by 6.9% during The Year of the Rooster (2017), which is a significant improvement over the government’s target figure of 6.5%, and even ahead of market expectations. This can only be a net positive for its deregulatory efforts, as fears over overproduction affecting GDP were curbed by new sectors growing and compensating for what otherwise would have been wasted energy production capacity. While the figures look good, the underlying issue of overcapacity has yet to be dealt with on a more permanent basis — though within the final draft of regulatory trading rules set by China’s government, there is a provision that gives it the power to set in place minimum energy prices, in the case of “cut-throat competition” due to “severe oversupply”.

Only time will tell if the New Year brings with it yet more growth for the world’s largest energy market (25% of global energy use), however, there are several factors that will make an impact.

Perhaps the most critical factor in China’s energy market within these next few years will be the adoption of deregulated market legislation and its adoption within the many regions and autonomous regions that comprise it. Restart Energy, as a deregulated energy supply company, needs deregulation to happen first before market penetration can be made. Once it is, however, it will be the first time in the history of the energy market that deregulated countries will make up the majority of the global market: 69%, by current figures.

Currently, announced plans are to open the market up to new players after the breakup of state-run energy monopolies — Restart Energy will keep a close eye on developments in this area to ensure a strategic entrance on the world’s largest energy market. Due to our powerful turnkey, token-based franchise framework, we will be able to obtain an edge both in market penetration as well as local knowledge and problem-solving, ensuring first-player advantage in the energy supply sector of the market once deregularization is reached.

China’s deregulation strategy has been quoted as an “orderly market reform” — which in practice translates to a region-by-region adoption tactic of free-market practices, that will help the world’s largest energy market limit the growing pains of adoption and modernization. These issues include:

• Power-plant dispatch instruction issues: In the past, power plants were issued orders about every day; now, due to fluctuating demand and supply, they have to be issued orders about once every hour, in liberalized test regions. This puts a strain on the human element of the infrastructure — however China is compensating by allocating more jobs in the sector and by adopting more modern solutions for the long-term resolution of this issue. A careful balancing act between problem solving and profitability must be maintained, however.
• Monitoring requirements: For the same reasons as the increasing frequency of dispatch orders, monitoring requirements have increased to meet dynamic market regulation demands.
• The absence of a spot trading market: As demand fluctuates due to several free-market factors, so must supply keep up. This means that more energy needs to be produced at peak times and less at low demand intervals, especially in the context of competition between deregulated companies that are law-bound to deliver on their contracts. However, current legislative propositions make it mandatory for energy buyers to forecast their demand one month in advance; this leads to a disparity between projected energy demand and actual energy demand — the gap between them must be settled by a spot trading market that can acquire excess power from elsewhere on the grid and distribute it to where it’s needed, and conversely sell off excess energy when it’s not. China estimates to resolve the issue by 2020, with spot market energy trading trials commencing by the end of this year.
• Grid connectivity: Several power plants, especially within the growing renewable segment, are yet to be fully connected to the grid. This issue has a clear solution, however, and is simply a symptom of the larger energy overproduction issue.
• Energy overproduction: Due to the focus on job creation and mandated production targets instead of fine-tuned supply and demand, China has reached a point where its energy plants vastly overproduce compared to local demand. Figures as high as 20% or more energy oversupply aren't unheard of in parts of the country. While currently energy waste has been kept to a minimum due to emerging sectors consuming the excess energy, it is not a sustainable model and will have to be addressed before decentralization is completed. Further compounding the issue is China’s switch to a more consumption-based economy, that has led to its industry being streamlined — the same sector that has represented 75% of the country’s power needs. However, given the right spot trading practices and an accelerated energy consumption in other sectors, China can well make up the difference and even gain a robust energy grid in the process.

Some of the best news to recently come out of China, especially given our company’s vision of green energy adoption, has been the surprising rooftop solar boom forecast for 2018. It seems that The Year of the Dog will add 24 Gigawatts of solar power installations, especially rooftop solar, on top of the roughly 30 Gigawatts already existent in China’s energy grid. Prices are already competitive — currently solar is an estimated 20% cheaper than the regulated energy alternatives in China — showing the efficiency of the new systems and the power of green energy done right.

Further good news for this month includes P2P energy trading being allowed between same-distribution-grid-connected generators and neighboring commercial or industrial consumers. This signifies China’s willingness to push through more modern energy trading practices and will further aid in the market penetration and adoption of Restart Energy’s own P2P energy trading platform, once The Dragon’s energy market has been fully deregulated.

About Restart Energy

Restart Energy Democracy (RED) is a blockchain-powered platform, backed by Restart Energy — a European energy provider with 20 million USD in revenues. The company was built with a vision to democratize the energy sector and quash the dominance of legacy monopolies in the energy world. The company’s credentials include a customer base of 27,000 household and 3,000 corporate clients, expanding at more than 2,000 clients per month, and its impressive growth: 1700% from 2015 until today.

Restart Energy is developing the world’s first peer-to-peer, fully decentralized energy transfer platform allowing users to send and receive energy worldwide, based on its proprietary virtual balancing system, that uses A.I, Big Data, and IoT technologies. The RED ecosystem is comprised of the RED-Platform, RED-Franchise and RED-MWAT Tokens.

The RED-Franchise is the first power retail franchise to simplify and allow any company or entrepreneur to operate their own power utility enterprise, enabling them to start selling energy in more than 35 deregulated energy markets globally.

MWAT tokens are crypto-tokens that enable the virtual storage and trade of up to 1 MWh of electricity per month on the RED-Platform Software and will facilitate the development of affordable clean energy, through free-market practices. They come pre-charged with 0.11 kWh and get monthly free energy from a special community energy fund that is charged with 1–5% of total grid power — this energy is transferred by producers and suppliers in a special community energy fund in exchange for access to the RED platform.

Importantly, it should be noted that potential franchise partners will need to own (this is not a form of payment to us) a certain number of MWAT tokens, in order to qualify for our various franchise tiers — the secret to our award-winning growth as a business!

For more information, please visit our website, our Telegram, and read the Restart Energy whitepaper.

RED — Send and receive energy, worldwide.