China is the world leader in electricity generation with the highest installed capacity of 1,761 GW. While most of the electricity in China comes from coal, China is quickly becoming one of the biggest markets for renewable power. In order to increase renewable adoption, China recently announced a plan to roll out a consumption quota system. This quota based system will force grid companies and power purchasers to procure renewable power.
Market Design
How is the market structured?
The power market in China has a triangular structure: customers buy power from a grid company that purchases power from Independent Power Producers (IPPs) / power generators.
What are the geographic boundaries of the market?
The market covers the whole of China through an interconnected provincial power grid, a provincial branch of the state grid company.
What are the relevant price and delivery zones?
The State Development and Reform Committee is responsible for setting electricity rates.
Can I buy long-term power in the traded markets?
There is no liquid market for buyers to hedge price risk in China.
Who do I need to contract with to buy power?
Consumers buy power from their local utility (the utility covering the geographic area in which the load – consumer energy requirement – is located).
How are system costs and other social charges levied?
In general, a tariff can be broken into four components: generation, loss of transmission and distribution, fee of transmission and distribution, and a government fund. These costs reflect the local cost of the utility.
How do I prove I've bought renewable power?
From late 2018, renewable generation in China will be certified and tracked using Renewable Power Certificates (RPC). One RPC is issued for every MW of eligible renewable energy that is delivered to the electricity grid.
Within China, the National Energy Administration (NEA) is the governing body to track RPC.
How are RECs (Renewable Energy Certificates) procured? N/A
Are renewable Power Purchase Agreements (PPAs) available? Yes
Are Green Tariffs available? Yes
What are the key institutions?
Regulators:
- National Development Reform Commission
- National Energy Administration
Key Government Departments:
- National Development Reform Commission
- National Energy Administration
- Ministry of Finance of People’s Republic of China
System Operators:
- State Grid Corporation of China, China Southern Power Grid Company and provincial power companies
- Total Capacity
- Total Generation
