Investment And Financing Analysis For Chinese Power Grids

For a long time, more emphasis has been laid on power generation than transmission in China's power industry because of the power shortage problem. The ratio of investment in power grids is seriously low and the electricity investment structure in is unreasonable. In a long period in the future, China's urbanization and industrialization process will promote the further growth of electricity demand, but also bound to demand higher requirement of the electricity grid investment. As a main investment subject, the performance of the grid enterprises concerns to the power grid security in the new power grid investment demand. Apart from government investment, the social capital is also needed to be accumulated in order to increase investment in the power grids which is a capital-intensive industry. In order to ensure a strong power grid and coordinated development of power generation and transmission, adequate and reasonable power grid investment and financing is necessary.In this paper, the forecast model of power investment developed by the International Energy Agency (IEA) was used in Chinese 2008-2020 power investment needs. This paper also analyzed the power grid requirements put forward by the positive energy policy. It came to a conclusion that more attention would be paid to transmission than power generation in the future and large power grid was important in the optimal allocation of energy and environment resources, as well as the protection of national energy security.On the base of the power investment forecast, this paper further analyzed the performance of the grid enterprises in a medium-long term, in order to find a financing mode for Chinese power grids which could support the sustainable development of grid enterprises. The results showed that the increase in power grid investment would have significant impact on performance of power grid enterprises, and it should be offset by the increase of sales price. It also showed that expanding financing channels, achieving diversified financing modes was an inevitable choice for grid enterprises' sustainable development. The grid enterprises could maintain or slightly reduce the current ratio of bank loans and expanded other debt forms (such as corporate bonds) to meet some of the demand for grid investment funds. At the same time, equity financing was also an inevitable trend.