SHI Dan, NIE Xinwei:Institutional Cost of Power Trade and China's Choices in GMS Power Cooperation

Abstract  This paper conducts an in-depth research on the “Border Effect” of power exchange.It discusses the three factors affecting the electric power cooperation and the impact of institutional cost on the type of cooperation.On this basis, electric power cooperation among GMS countries is studied.The research findings are as follows.Due to differences in GMS countries’ economic development and the level of development of power industry, bilateral short-term trading becomes the main type of cooperation rather than regional trade arrangements, which increases the institutional cost of regional power exchange and blocks the development of centralized-trading system in regional electricity market.Regarding China's partnership, China is in over pursuit of short-term gains from individual cooperation.However, the eager entrance of Chinese corporations and the magnitude advantage over the corporations in targeted countries has caused “fears and threats” mentality in these countries, which has seriously reduced the willingness of cooperation.Therefore, China's electric power cooperation with sub-regional countries can hardly be developed further and are even exposed to risks of isolation.To strengthen electric power cooperation and to realize the target of regional power market construction, the following suggestions are proposed.In the sub-regional electric power cooperation, China should become the active promoter and supporter, continue to strengthen political mutual trust between countries, and deepen consensus on the reform of the electricity market.In accordance with recommendations of regional power exchange operating agreement, China should accelerate construction and improvement of regional cooperation and coordination mechanisms, play an active role as a third-party platform, and create a collaborative environment for the construction of regional electricity market.

Key words： Power Trade    GMS Power Cooperation    Power Interconnection    Regional Coordination

Source: Finance & Trade Economics , No.9, 2014