At this time, Shell also chose to enter the Chinese power market. In retrospect, it was not a good time.

After the opening of China’s electricity market, the competition has become extremely fierce, and many electricity companies have started a price war. As the power glut of previous years has eased, the gap between market and benchmark prices has narrowed, squeezing profit margins for power sellers.

In 2021, the rare shortage of power supply and demand in the country, coupled with the rise in coal prices, has led to rising costs for power generation enterprises, and many power generation enterprises have increased losses, and the trading difference in the electricity market has been further squeezed.

PXIE-2593  Affected by this, the sale of electricity enterprises have a large area of losses. According to the “Guangdong Power Market Semi-annual Report 2021” released by Guangdong Power Trading Center in August 2021, in the first half of the year, the overall loss of 161 power selling companies was 88.2% and the net loss was 310 million yuan. In 2020, its overall loss is only 2%, with a net profit of 2.44 billion yuan.

During the period, Shell’s electricity trading business in China was not smooth. According to the data of Jiangsu Trading Center, Shell Energy (China) Co., Ltd. was registered in Jiangsu Power Trading Center on February 17, 2020, but it still did not carry out electricity sales business by the end of 2021. In 2022, in order to restart the electricity sales business, the company once again publicized information in the trading center. But there are still no details of the deal.

In March 2021, the National Development and Reform Commission and the National Energy Administration issued the new “Measures for the Management of Electricity Sales Companies” to strengthen the dynamic management and risk management of electricity sales companies, and enforce the mandatory withdrawal of electricity sales companies that have not carried out electricity sales business in any administrative region for three consecutive years. During the period, many smaller electricity sales companies also chose to voluntarily withdraw.

PXIE-2593

PXIE-2593  According to data reported by First Finance and Economics, in 2018, there were more than 10,000 electricity sales companies registered in the country, but by 2021, the number has decreased to about 5,000.

With the tightening of policy management, the profitability of powerful electricity selling companies has improved, and the pressure on smaller or less experienced electricity selling companies has intensified.

Last year, the electricity market began to turn more profitable. In August 2023, the report released by the Guangdong Power Trading Center showed that in the first half of last year, a total of 130 electricity selling companies in Guangdong made a cumulative profit, 30 lost, and the electricity selling company made an overall profit, with a profit of 81.2%.

During the period, the average income of kilowatt-hour was 9.5 % / KWH, of which the electricity sales company in the power generation background earned 7.7 % / KWH, the electricity sales company in the grid background earned 13.5 % / KWH, and the independent electricity sales company achieved 12.9 % / KWH income.