China releases guidelines on green energy trading

A notice posted on the website of China's state planner said that China had issued guidelines on medium- and long term green power trading. The notice called for a market based approach.

According to a notice jointly released by the National Development and Reform Commission and the National Energy Administration, the rule outlines a pricing mechanism whereby the green power price will be determined based on the electricity price plus a green certificate price.

The report said that transactions should not have a price limit, except when specified by the government, and that green power trading shouldn't be used to "disguise", or disguise, price reductions.

Green power trading is an approach based on the market to promote green electric consumption. It could help China move away from subsidies.

This rule also aims at standardising green power trading in different regions.

According to an online FAQ from the energy regulator, trading has been tested in Beijing, Guangzhou and Inner Mongolia, but with different rules and pricing mechanisms.

According to Q&A, the transactions increased 283% in average between 2021 and 2023 when 69.7 kilowatt hours of green energy were traded. This represents 1% of China’s electricity consumption in 2017.

With this new rule, NDRC & NEA also seek to make it easier to participate for export-oriented companies.

Researchers have warned that it is not certain to what extent China’s green certificates will be recognized internationally.

The guidelines cover wind and solar power, distributed resources, hydro, and geothermal energy, according to the notice.

China wants to reform the power sector by 2030 to create a national spot market. However, most transactions still take place on the basis medium- and longer-term contracts.

(source: Reuters)