Decathlon Group – Chao Wang – 2022
Goals
Electricity market reform in China and the trend towards RE100 will inevitably affect the price of electricity. Decathlon intends to understand the impact of these factors on suppliers’ electricity costs and product costs. Therefore, Decathlon engaged Chao Wang to create a tool to capture the additional costs to be paid in 2026 from a product perspective.
Solutions
Chao Wang divided the study into the following three steps:
- Reviewing China’s electricity reform policy: After reviewing relevant documents, Chao Wang concluded that in China, marketization of electricity is the most important feature of the electricity reform, which will lead to higher electricity prices.
- Forecasting the premium for green electricity in 2026: By analyzing the constitution of the green electricity price, Chao Wang linked the green electricity premium to the carbon price and calculated the green electricity premium by forecasting the carbon price.
- Designing the questionnaire and creating the measurement tool: Through the questionnaire, Chao Wang collected key data, such as suppliers’ electricity costs and electricity demand in 2026. The data collected was then applied to the measurement tool to ultimately calculate the increase in product costs.
Potential Impact
Calculations were made to derive the increase in the cost of various products as a result of electricity marketization and RE100. On average, the increase in product costs will be less than 1%. On the three dimensions of suppliers, products and regions, we have identified which suppliers, products and regions to focus on in the future. In addition, this study alerts suppliers to future power purchase methods and that choosing a power sales company may be a better option.
