Since the onset of summer this year, rising temperatures and humidity have caused electricity demand across Shandong Province to surge significantly. Faced with the challenge of ensuring a stable power supply during the peak summer period, Shandong has actively built a market system conducive to securing electricity supply. By utilizing market mechanisms to optimize resource allocation and encouraging market participants to engage in grid regulation, the province has successfully supported the grid’s power load, achieving "four record highs" with power consumption exceeding 100 million kW during both noon and evening peaks on 12 separate days. The maximum load reached 114.51 million kW during the noon peak on August 3, and the highest evening peak load was 105.85 million kW on August 2. The power market construction and the safe and stable operation of the grid have complemented each other, leading to coordinated development. Throughout the peak summer period, Shandong’s power supply remained stable and reliable, with no need to implement demand response or other load control measures.
Generation Side Performance
On the generation side, Shandong’s power market mechanisms played a key role during periods of tight supply and demand. The peak-period high prices in the spot market effectively incentivized power generators to maximize output. During the summer, coal-fired power generation capacity in Shandong increased by 4.78 million kW. Independent new energy storage stations contributed a maximum discharge capacity of 3.15 million kW. Additionally, the first batch of registered virtual power plants, consisting of 10 facilities, provided over 100,000 kW of flexible regulation capacity. During peak load periods, the non-outage and non-congestion rates for generation units dropped to below 2%, marking a historic breakthrough with six power plants (14 units) achieving zero non-outage and congestion incidents, and 12 wind farms (with over 100 turbines each) reaching a “zero non-outage” milestone.
Demand Side Optimization
On the demand side, through market mechanisms and time-of-use pricing policies, time-differentiated prices formed in the mid- to long-term and spot markets were effectively transmitted to end users. This encouraged both supply and demand sides to actively participate in grid regulation. The retail market’s time-differentiated pricing constraint mechanism was further improved, with the peak and valley TOU tariff. spread exceeding 3:1. By referencing the time-based price signals from the spot market, the time-of-use pricing mechanism for industrial and commercial users was optimized, including timely adjustments to parameters such as the floating proportion of time-of-use prices for purchasing agents and the length of peak and valley periods. For all industrial and commercial users, a time-based capacity compensation pricing system was implemented, with a peak and valley capacity compensation factor in which the peak coefficient was 20 times that of the valley coefficient. Market-based users successfully shifted approximately 2.8 million kW during the evening peak, significantly reducing the pressure on the power supply. The highest load during the evening peak reached 106 million kW, an increase of 4.8% compared to the same period last year. As of the end of July 2024, the total electricity consumption of the grid was 388.041 billion kWh, an increase of 6.7% year-on-year, outpacing the growth in peak load.
Next Steps
Moving forward, the Shandong Energy Regulatory Office will intensify efforts and diligently fulfill its regulatory duties, working with relevant authorities to continue securing the power supply. By fully leveraging market mechanisms and promoting the large-scale participation of new market entities such as virtual power plants and user-side energy storage, the system’s regulation capabilities will be further tapped to ensure the safe, stable, and reliable operation of the power grid.
