China has introduced new measures to fully integrate wind and solar power into the electricity market, following a milestone where the country’s new energy power generation capacity surpassed that of coal-fired plants.
The National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) jointly announced the measures on Tuesday. According to the notice, grid-connected electricity prices will now be determined through competitive market mechanisms.
A differential pricing mechanism will be applied to address the challenges posed by the randomness, volatility, and intermittency of new energy generation. An NDRC official explained that if the market transaction price falls below the mechanism’s set price, electricity generators will receive compensation. Conversely, if the price exceeds the set level, generators must return the excess amount.
This system aims to provide companies with stable and reasonable price expectations, supporting the steady growth of the new energy sector and helping China achieve its dual carbon goals, the official added.
The notice specifies that existing projects operational before June 1 will adopt the differential settlement mechanism. New projects added after that date will have their mechanism-based electricity prices determined through competitive bidding in local markets.
The NDRC official also addressed the impact on end-user electricity prices. Residential and agricultural users will see no changes in their rates. For commercial and industrial users, the average electricity price across China is expected to remain largely unchanged in the first year of implementation.
However, in regions with abundant power supply and relatively low new energy market prices, slight reductions may occur. Over time, electricity prices for commercial and industrial users will fluctuate based on power supply and demand dynamics, as well as the development of new energy sources.
According to NEA data, China’s new energy power generation capacity reached approximately 1.41 billion kilowatts by the end of last year, accounting for over 40% of the country’s total installed capacity and surpassing coal-fired power installations for the first time.
A report by the China Electricity Council predicts that this year’s additional power generation capacity could exceed 450 million kilowatts, with more than 300 million kilowatts coming from new energy sources.
These measures mark a significant step in China’s transition toward a greener and more sustainable energy system, aligning with its broader environmental and economic goals.
