China’s updated electricity market rules to benefit renewables, storage

China’s National Development and Reform Commission (NDRC) has recently updated its electricity market operation rules, which will take effect on July 1. The National Energy Administration (NEA) subsequently hosted a press briefing to elucidate the key modifications to the rules compared to the 2005 version.

The renaming to the “Basic Rules for the Operation of the Power Market” was a notable change to harmonize with the terminologies outlined in the Electricity Regulations issued by the State Council. Additionally, changes were made to the market’s scope, operational entities, and transaction subjects.

The revised rules now encompass a broader range of market participants, including power market operators, grid companies, provincial-level power trading centers, power sales firms, energy storage companies and virtual power plants, with the goal to ensure competition and orderliness in the market.

Furthermore, the transaction categories have been refined to encompass medium- and long-term trading, spot and power auxiliary service trading, involving services such as frequency regulation, peak shaving, and other remunerated auxiliary services. The trading can be executed through bilateral and centralized trading mechanisms, with market competition determining the providers of qualified auxiliary services.

The updated regulations also enhance the criteria concerning risk prevention and management and establish guidelines for intervening in the electricity market during risky situations.

The regulatory body will develop intervention rules for the power market, including measures like suspension, discontinuation, and restoration, based on market operation needs and system security requirements. These rules will outline the conditions for implementing intervention measures in the power market and the corresponding procedures.

Electricity market operators will adhere to the “operator in charge of prevention and monitoring” principle to fulfill their responsibilities for market monitoring, risk prevention, and control as outlined in the regulations.

Moreover, the new regulations underscore the significance of information disclosure and outline the responsibilities of power regulators in terms of information dissemination and market oversight. Serving as a departmental regulation under the NDRC, these rules establish the legislative foundation and guiding principles for a series of subsequent normative documents, including the fundamental rules of the electricity market.

Industry observers view these regulations as the most pivotal normative document for China’s power market since 2005, poised to propel the country’s power sector toward market-oriented reforms. The introduction of entry permits for emerging operators is expected to facilitate the increased deployment of renewable energy sources in China while ensuring the secure operation of its power infrastructure.