CHINA will free up its electricity retail market, long controlled by two dominant State-run grid companies, as the Central Government draws up a reform plan to boost efficiency of the world’s largest power market, a power executive said Friday.

    Such a liberalization, on a pilot scheme in Shenzhen, would require the grid companies, namely the State Grid Corp. of China and China Southern Power Grid, to segregate their power transmission and distribution business, a transformation that may take years to complete, industry experts said.

    A senior official with Datang International Power Generation Co. Ltd. told Reuters that under the revamp plan due to be announced soon, State grid firms would be mainly responsible for transmission while the distribution sector would be open to the market.

    “Power firms like us will be keen to get involved in the distribution business,” said the official, who requested anonymity as he was not authorized to speak to the media.

    State media has reported that regulators are close to finalizing plans to liberalize China’s power market.

    Under the revamp, the Central Government will liberalize tariffs grid firms pay power generators and also the prices paid by consumers, a move that could eat into margins of generators and grid firms in an oversupplied market.

    “China’s power sector is the biggest in the world now and making major changes to it will take years,” said Zhou Xizhou, senior director of China energy with consultancy IHS, adding that deregulation in more mature European and North American markets took a decade or more from inception.

    “Supply reliability is still the top issue. Whatever reforms are implemented, the government has to ensure that they’re moving at an appropriate pace so as not to cause supply disruptions,” said Zhou.

    The industry’s last overhaul dates back to 2002, when the Central Government separated power generation from transmission, creating five top State-controlled generating firms and two grid firms.

    Reform has since slowed and China has frequently experienced power shortages as economic growth outpaced supply.

    (SD-Agencies)