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 the joint notice issued by National Development and Reform Commission and National Energy Administration, the rule lays down a pricing mechanism whereby the green power price will be determined based on the electricity price plus price of the green certificates.

The green certificates issued by NEA are tradable and represent 1,000 kilowatt hours (kWh) each of renewable energy consumption.

The report said that transactions should not have a price limit, except when specified by the government, and green energy trading should not serve as a "disguise", or a way of reducing prices.

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 aims also to standardise the 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 approximately 1% of China’s electricity consumption in 2017.

The new rule will also make it easier for exporters to participate.

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)