ABSTRACT
In the past three decades, the economy in China has been growing on average at 9.7 per cent every year based on the national comparable prices. Accordingly, China is one of the world’s largest and fastest growing markets for electricity power generating, where the total generation rose from 256.6 gigawatt/hour to 2,834.4 gigawatt/hour in the same time period (NBS, 2006), even though the gap between the electricity demand and supply was still growing. There was also less competition due to the insufficient power generation capacity and the state-owned electricity industry that controlled both the power generation facilities and the distribution network. Facing these increased challenges, the Chinese central government decided to reform the state-owned electricity industry in China, and to introduce the competition incentive into the electricity system so that the generation cost could be reduced, the generation efficiency could be improved, and the financing scheme for new power plants could be diversified (China business web).
