Will wholesale electricity markets be implemented in China?

Implementation of wholesale electricity markets is a major theme of China’s power sector reform effort, launched in early 2015. The central government has issued guidance documents on market design, and various Chinese provinces and regions have announced pilots for wholesale electricity markets.

How are coal-fired generators priced in China?

Under China’s status quo approach to wholesale pricing, prices for coal-fired generators were set by the National Development and Reform Commission (NDRC), together with provincial-level officials, on a fixed yuan per kWh basis.

What is a renewable power reform?

The reform focuses on three key aspects: allowing market forces to determine renewable power pricing, establishing a pricing and settlement mechanism that supports the long-term sustainability, and adopting differentiated policies for existing and new projects.

What is the wholesale market for electricity?

The wholesale market for electricity, when traded as a commodity, is usually divided into the MLT market and the spot market, according to duration of trading cycle.

Are wholesale prices overcompensating investment in coal-fired capacity?

In recent years, wholesale prices have overcompensated investment in coal-fired capacity by failing to adjust in the face of weakening demand growth and declining coal prices, exacerbating coal-fired generation overcapacity.

Why do coal-fired generators resist market reforms?

What’s worse, the status quo gives coal-fired generators reason to resist market reforms. The challenge is to reform wholesale pricing, so that it sends better signals for investment in flexible resources (including demand-side and gas-fired resources) and the operation of resources flexibly.