China pushes market reform of new energy electricity pricing

A technician inspects a turbine at a wind farm in Hinggan League, Inner Mongolia autonomous region, in May 2023. [WANG ZHENG/FOR CHINA DAILY]

BEIJING -- Chinese authorities announced Sunday that the prices of on-grid electricity generated from new energy will be determined by market as the country pushes forward market reform of new energy electricity pricing.

All on-grid electricity generated from new energy such as wind and solar power, whose prices have so far been fixed, will all enter the electricity market, according to a notice issued by the National Development and Reform Commission and the National Energy Administration.

"With its large-scale development, the fixed pricing for on-grid new energy electricity cannot fully reflect market supply and demand, nor does it share its due responsibility of power system regulation," the two authorities told Xinhua, stressing the need to leverage market mechanisms and promote high-quality development of the sector.

The cost reduction in building new energy facilities, the rapid development of regional electricity markets as well as the regulatory improvements have all created favorable conditions for the full participation of new energy into market transactions, they said.

A price settlement mechanism will be established to support the sustainable new energy development, and different pricing methods will be adopted to the new and existing projects, according to the document.

Projects that begin operation on or after June 1 this year will partly sell electricity under the new mechanism, which would match the transaction prices with rates set through market-based bidding to help them avoid revenue fluctuation in trading, it said.

For projects put into operation before June 1, the prices and volume of electricity to be covered by the new mechanism shall be properly aligned with current policies.

China has placed great emphasis on the development of new energy. By the end of 2024, its installed capacity of new energy generation has reached approximately 1.41 billion kilowatts, accounting for more than 40 percent of the national total, surpassing the installed capacity of coal-fired plants.