Since the issuance of Several Opinions of the Central Committee of the Communist Party of China and the State Council on Further Deepening the Reform of the Electric Power System in 2015, the reform of China's electric power marketization has been deepening, and the proportion of market traded electricity has risen from less than 17% in 2016 to more than 61% in 2023. The market mechanism has played a decisive role in resource allocation.

According to the data released by the China Electricity Council, in 2023, all power trading centers nationwide will organize 5667.94 billion kilowatt hours of market trading electricity, up 7.9% year on year, accounting for 61.4% of the total social electricity consumption, up 0.6 percentage points year on year. Among them, 4.43 trillion kWh of electricity was directly traded in the national electricity market in the medium and long term, up 7% year on year.

Among all the market traded electricity, the total traded electricity in the province is 4509.01 billion kilowatt hours, of which 4299.53 billion kilowatt hours are directly traded in electricity (including 53.77 billion kilowatt hours for green power transactions, and 879.47 billion kilowatt hours for power purchase agents), 196.42 billion kilowatt hours are traded in generation rights, and 13.05 billion kilowatt hours are traded in other transactions. The total amount of electricity traded between provinces is 1158.94 billion kilowatt hours, including 129.36 billion kilowatt hours of direct inter provincial power trade, 1015.97 billion kilowatt hours of inter provincial export trade, and 13.61 billion kilowatt hours of generation rights trade.

Among them, the power trading centers in the State Grid region have accumulated 4443.36 billion kilowatt hours of electricity traded in the market, up 6.8% year on year, accounting for 61.1% of the total social electricity consumption in the region. Among them, Beijing Power Trading Center has organized 1087.95 billion kilowatt hours of electricity traded between provinces, up 13.2% year on year; The power trading centers in the Southern Power Grid region have accumulated 931.77 billion kilowatt hours of market electricity, up 9.2% year on year, accounting for 59.2% of the total social electricity consumption in the region; Inner Mongolia Electric Power Trading Center has organized a total of 292.81 billion kWh of market trading electricity, up 22.6% year on year, accounting for 77.3% of the total social electricity consumption in the region.

In 2023, the total electricity volume of medium - and long-term direct power transactions in the national electricity market will be 4428.89 billion kWh, up 7% year on year. Among them, the total electricity volume of direct power transactions (including green power and grid purchase) within the province is 4299.53 billion kWh, and the total electricity volume of direct power transactions (external) between provinces is 129.36 billion kWh.

In 2023, the total electricity volume of medium - and long-term direct power transactions in the State Grid region will be 3377.7 billion kWh, up 5.6% year on year; The total electricity volume of medium - and long-term power direct transactions in the Southern Power Grid region was 814.97 billion kWh, up 10.6% year on year; The total electricity volume of medium - and long-term direct power transactions in the West Inner Mongolia Power Grid region was 236.22 billion kWh, up 15.5% year on year.

On May 15, 2023, the Notice of the National Development and Reform Commission on the Transmission and Distribution Price of Provincial Power Grid in the Third Supervision Cycle and Related Matters (FGJG [2023] No. 526) was officially released. From June 1, 2023, a new round of transmission and distribution tariffs will be implemented nationwide!

This round of transmission and distribution price reform has taken important steps in improving the transmission and distribution price supervision system, accelerating the construction of the power market, etc; Second, the function of transmission and distribution electricity price is more clearly positioned, and the online link line loss and pumped storage capacity electricity cost originally included in the transmission and distribution electricity price are listed separately, which is conducive to more timely and reasonable reflection of the changes in user purchase line loss, clear reflection of the power system's regulation of resource costs, and further strengthening the supervision of grid allowable income; Third, the incentive and constraint mechanism is more perfect, and the demand price of two-part users with high load rate is discounted, which is conducive to guiding users to reasonably report installed capacity and improving the economy of the power system.

Since China started a new round of power system reform in 2015, the transmission and distribution price has gone through two rounds of reform: in 2017, the transmission and distribution price verification in the first regulatory cycle was completed; The verification of transmission and distribution electricity price in the second supervision cycle will be completed in 2020. In the third supervision cycle, the transmission and distribution price is further improved on the basis of the first two cycles, and the price of each link is comprehensively rationalized to make the price composition more clear, which marks that China's transmission and distribution price reform has taken another big step towards scientific supervision.

This round of transmission and distribution price reform is mainly manifested in five firsts: the verification of transmission and distribution price structure at different voltage levels is achieved for the first time; The electricity price of capacity and demand shall be checked and approved for the first time according to the voltage level; The incentive mechanism based on load rate is established for the first time; The "system operation cost" is established for the first time and listed separately from the transmission and distribution price; For the first time, the line loss cost in the link of grid connection is listed separately to further restore the power commodity attribute.

In terms of electricity price composition, after the new round of transmission and distribution electricity price is launched, the line loss cost of the grid link originally included in the transmission and distribution electricity price is listed separately outside the transmission and distribution electricity price. The electricity cost of pumped storage capacity originally included in the transmission and distribution electricity price and other costs unrelated to the transmission and distribution link are adjusted to the system operation cost and listed separately outside the transmission and distribution electricity price. That is:

Before adjustment: electricity price for industrial and commercial users=on grid price+comprehensive transmission and distribution price (including line loss cost in the online link and system operation cost)+government funds and surcharges.

After adjustment: electricity price of industrial and commercial users=on grid price+line loss cost of on grid link+transmission and distribution price+system operation cost+government funds and surcharges.

In November 2023, the Notice of the National Development and Reform Commission on the Establishment of a Coal Electricity Capacity Price Mechanism was officially issued. The coal electricity capacity price mechanism will be established from January 1, 2024, and the two-part price policy will be implemented for coal electricity.

The "boots" of capacity electricity price will be launched, and China's electricity price reform will take another step. The introduction of coal power capacity pricing mechanism has milestone significance for China's electricity price reform, marking the gradual establishment of a price system that reflects the diversified value of electricity in the new power system.

The operating costs of coal and electricity include fixed costs such as depreciation costs, labor costs, repair costs, financial costs, and variable costs such as coal. At present, China has implemented a single electricity price system for coal power, that is, only generating electricity can recover the cost of coal power. In countries with mature electricity markets, two-part electricity prices are usually adopted, that is, capacity price mainly recovers fixed costs of units, and electricity price mainly recovers variable costs. The establishment of a coal power capacity pricing mechanism and the implementation of a two-part pricing policy for coal power are not only the practical needs of the rapid development of new energy in China in recent years, but also the inevitable requirements of the next step to promote the further acceleration of new energy development and green low-carbon transformation of energy.

In the long run, the establishment of coal power capacity pricing mechanism and the first realization of the distinction between the energy value and capacity value of coal power, the main power source, can effectively promote the establishment of a multi-level power market system, guide market participants such as coal power and new energy to show their strengths, do their best and compete fully, comprehensively optimize the allocation of power resources, and improve the economy of the entire power system, It is also beneficial to reduce the power consumption cost of end users.

From 2024 to 2025, the proportion of fixed cost recovery through capacity price in most places will be about 30%, and 50% will be adopted in some places with rapid transformation of coal power function. Provinces that adopt 50% of the total installed capacity are divided into three categories: the first category is that the installed capacity of thermal power is relatively low, such as Sichuan, Yunnan and Qinghai, whose installed capacity of thermal power is less than 15% in recent years; The second category is the regions with rapid growth of electricity consumption and high proportion of hydropower in recent years, such as Guangxi, Hunan and Chongqing; The third category is the provinces with large installed capacity of coal power with low utilization hours of coal power generation, and the provinces with limited balance capacity of local power grid and its regional power grid, such as Henan.

In 2024, the proportion of fixed cost recovered from the capacity electricity price is estimated to be 132 yuan/kW · year based on 40%, and the corresponding capacity electricity price is 132.7 billion yuan. The compensation capacity electricity price has little impact on the industrial and commercial electricity price, and the electricity price per kilowatt hour increases by about 0.01658 yuan/kWh. Assuming 100% one-time evacuation, the estimated impact on industrial and commercial electricity prices is about 0.04145 yuan/kWh. In the future, the growth of compensation capacity will be less than that of industrial and commercial electricity, and the compensation amount per kilowatt hour will decline year by year.

On August 3, 2023, the National Development and Reform Commission, the Ministry of Finance and the National Energy Administration jointly issued the Notice on Improving the Full Coverage of Renewable Energy Green Power Certificates to Promote the Consumption of Renewable Energy Power (hereinafter referred to as the "Notice"), which clearly defined the national wind power (including decentralized wind power and offshore wind power), solar power (including distributed photovoltaic power and solar thermal power) All the electricity generated by the registered renewable energy power generation projects, such as conventional hydropower, biomass power generation, geothermal energy power generation, and ocean energy power generation, has been verified and issued green certificates, achieving full coverage of green certificate verification, marking a new stage of green certificate verification.

The notice clarifies the status, scope of application, issuance and trading mode of green power certificate, and clarifies that "green power=renewable energy power", which marks that China's green power certificate mechanism is basically mature and has entered the stage of full operation. The state will encourage multinational companies and their industrial chain enterprises, export-oriented enterprises, and industry leading enterprises to purchase green certificates and use green electricity to play a leading role in demonstration. We will encourage central enterprises, local state-owned enterprises, government agencies and institutions to play a leading role and steadily increase the proportion of green electricity consumption. Strengthen the responsibility of high energy consuming enterprises for green power consumption, and improve the level of green power consumption as required. Support key enterprises, parks and cities to consume green power in a high proportion.

The renewable energy green power certificate, or green certificate, is the only proof of the environmental attributes of renewable energy power in China, and the only proof of the production and consumption of renewable energy power. As a renewable energy power consumption certificate, the green certificate is used for renewable energy power consumption accounting, renewable energy power consumption certification, etc. In 2017, China's green card system was officially implemented. As a major measure to improve the renewable energy policy, the green card trading system was expected to be launched. From the perspective of the types of green certificates, at present, green certificates in China mainly include subsidized green certificates and non subsidized green certificates. The scope of subsidy green certificate issuance includes onshore wind power and photovoltaic power station projects included in the national subsidy list; The scope of non subsidized green certificate issuance includes affordable (low-cost) onshore wind power, photovoltaic power generation projects, and renewable energy power generation projects that exceed the reasonable utilization hours of the whole life cycle or reach the subsidy period.

At present, the main types of domestic green card market include Chinese green card GEC, international green card I-REC, global renewable energy trading tools APXTIGRs, etc., of which GEC and I-REC are more commonly used.

According to the statistics of the National Energy Administration, 20.6 million green certificates will be issued in 2022, corresponding to 20.6 billion kWh of electricity, an increase of 135% over 2021; The number of transactions reached 9.69 million, corresponding to 9.69 billion kWh of electricity, an increase of 15.8 times over 2021. By the end of 2022, about 59.54 million green certificates had been issued and 10.31 million green certificates had been transacted, which strongly promoted the green low-carbon transformation and high-quality development of the economy and society.

Since the trial implementation of the green certificate system in China, the green certificate market has generally improved, which has initially promoted the whole society to form a better awareness of green power consumption. The scale of green power green certificate transactions has steadily expanded. By the end of October 2023, the total amount of green power trading electricity has reached 87.8 billion kilowatt hours, and 148 million green certificates have been issued.

On December 13, 2023, the National Energy Administration held a kick-off meeting for green certificate issuance, and 12 power generation enterprises applying for green certificates and 10 green power user representatives were awarded the first batch of green power certificates issued by the National Energy Administration. The first batch of green certificates issued by the National Energy Administration was about 11.91 million, involving 1168 projects and 755 power generation enterprises. With the increasing installed capacity and power generation of renewable energy in China, and the full coverage of green certificate issuance, China will become the largest green certificate supply market in the world.

According to Beijing Electric Power Trading Center, as of December 13, 2023, the green certificate trading platform of State Grid Corporation of China has cumulatively traded 23.64 million green certificates, and the trading volume has increased significantly; The maximum daily trading volume of State Grid Corporation of China's green card trading platform was 5.68 million, with a trading amount of more than 110 million yuan, setting a new high in the daily trading volume of green cards in China, which played an important role in promoting the green card system, strengthening the green card function, and improving the social recognition of green cards.

Green power trading is mainly for renewable energy power generation such as photovoltaic and wind power. With the continuous growth of clean energy installed capacity, renewable energy has become an important force to ensure power supply. According to the data of the National Energy Administration, by the end of 2023, the total installed capacity of renewable energy in China has reached 1.45 billion kilowatts, accounting for more than 50% of the total installed capacity of power generation in the country and more than that of thermal power; China's annual renewable energy generation capacity is 3 trillion kWh, accounting for about 1/3 of the total social electricity consumption, of which wind power and photovoltaic power generation account for more than 15% of the total social electricity consumption.

Since 2023, green power transactions have achieved leapfrog growth. In 2023, China's green power transaction will reach 53.77 billion kWh, accounting for about 0.95% of the national market transaction volume. Public data shows that in 2023, Beijing Tianjin Hebei region will complete the annual green power transaction of more than 23 billion kilowatts. In 2023, Zhejiang's green power trading capacity will reach 8.213 billion kWh, up 218.85% year on year. In 2023, Guizhou's green power trading capacity will reach 790 million kilowatt hours, an increase of 26 times year-on-year.

In addition, China's green power trading pilot ushered in new development. The General Office of the National Development and Reform Commission and the General Department of the National Energy Administration issued the Reply on the Pilot Scheme of Green Power Trading in the Inner Mongolia Power Market, formally agreeing to the Pilot Scheme of Green Power Trading in the Inner Mongolia Power Market. This means that Mengxi Power Grid has become the third green power trading pilot approved by the state after the State Grid and China Southern Power Grid.

This time, Inner Mongolia has been approved by the state to become the third green power trading pilot in China, making Mengxi Power Grid, the third largest power grid in China, also have its own green power trading platform. So far, China's major power markets have all had special green power trading platforms. China has three major power grid companies, namely State Grid, China Southern Power Grid and Mengxi Power Grid. Previously, green power trading has been carried out within the market scope of State Grid and China Southern Power Grid, while Mengxi Power Grid has never built a green power trading pilot. The installed capacity and power generation of non water renewable energy in Inner Mongolia rank first in the country, and the export power also ranks first in the country. The green power trading potential is huge. As more and more high energy consuming enterprises are attracted by the rich green power resources in Inner Mongolia, the green power trading pilot in Mengxi Power Grid will help the high energy consuming enterprises settled in obtain the corresponding green rights and interests. After Inner Mongolia became a pilot of green power trading, it is conducive to the growth of green power supply and the expansion of market scale.

According to the data disclosed by Bloomberg New Energy Finance, technology giants, heavy industrial enterprises, automobile enterprises and advanced manufacturers are currently the most active in the green power market. In 2023, the top five buyers of green power transactions for Chinese enterprises will be Alibaba Group, Baosteel (Baoshan Base), Lixun Precision, BMW Group China, and Tencent (ranking based on the scale of green power purchase transactions that have been consumed on November 10, 2023, have signed agreements or are planned to be carried out in 2023).

There are two leading sellers of green power transactions for Chinese enterprises, namely, CGN Nuclear Energy Co., Ltd., which is one of the sales companies, and Hailan Power Co., Ltd., an independent power sales company.

In recent years, with the continuous and rapid growth of new energy installed capacity, it has become an important issue to further optimize the time of use electricity price policy, stimulate and encourage users to cut peak load and fill valley load by optimizing power utilization, alleviate the pressure on supply guarantee and promote the consumption of renewable energy.

Time of use electricity price refers to the division of 24 hours a day into several periods according to the system operation status. Each period is charged according to the average marginal cost of the system operation. It has the function of stimulating and encouraging power users to shift peak load and fill valley load, and optimizing the power consumption mode.

From the scope of application of the time of use tariff mechanism that has been basically established in all provinces of the country, it is found that the users implementing the time of use tariff are generally large industrial users and general industrial and commercial users. From the perspective of price fluctuation, the floating proportion of peak and valley prices in various provinces is mostly between 50% and 80%, while the floating proportion of peak and deep valley prices is further increased on the basis of peak/valley prices. From the overall trend, it mainly shows the increase of the peak valley price difference and the permeability in the "two charging and two releasing" areas.

In 2023, 11 provinces, including Beijing, Shandong, Hubei, Liaoning, Ningxia, Xinjiang, Gansu, Fujian, Hebei, Yunnan and Qinghai, will introduce new policies on time of use electricity price. Shandong launched the Notice on Further Optimizing the Industrial and Commercial Time of use Electricity Price Policy and the Notice on Improving the Time of use Electricity Price Policy issued by Fujian Provincial Development and Reform Commission to further promote the reform of transmission and distribution electricity prices and increase the peak valley price difference. Hubei launched the Notice on Doing a Good Job in Industrial and Commercial Time of use Electricity Price Mechanism (Draft for Comments), which forced the user side to increase photovoltaic distribution and storage by adjusting industrial and commercial electricity prices to the "noon valley" mode.

A reasonable price difference between peak and valley prices is very important for giving play to the role of price signal and guiding power users to cut peak and fill valley. For industrial and commercial users, the TOU price policy may not only lead to the increase of electricity costs for some enterprises, but also benefit some enterprises.

In 2023, China's power spot market will enter the acceleration period. By the end of 2023, a total of 29 regions across the country have launched spot power market (trial) operation, and the construction coverage has reached an unprecedented level.

At the policy level, in September 2023, the Basic Rules for the Spot Power Market (for Trial Implementation) was released to the public, marking the existence of the "Basic Law" for China's spot power market. One month later, the Notice on Further Accelerating the Construction of the Spot Power Market was released, proposing to promote the spot market to officially operate, orderly expand the construction scope of the spot market, and orderly achieve full coverage of the spot power market.

On December 22, 2023, the spot power market of Shanxi Province will be transferred from trial operation to official operation, becoming the first provincial spot power market in China. On December 29, 2023, the spot market of Guangdong electric power will be officially put into operation. At the same time, two batches of spot power markets in 14 regions in China have been in pilot, and the spot power markets in Gansu and Shandong are close to official operation.

Except that Shanxi and Guangdong will be officially put into operation at the end of December 2023, Mengxi, Shandong and Gansu will continue to carry out uninterrupted settlement trial operation; Fujian completed the first trial operation of long-term bilateral settlement on December 7-21; After the start of long-term continuous settlement trial operation, Sichuan is exploring to carry out long-term settlement trial operation of thermal power in dry season. Zhejiang has promoted two commissioning of power dispatching, and will launch spot market operation in 2024.

In the second batch of 6 pilot areas, in 2023, 5 areas in Jiangsu, Anhui, Liaoning, Hubei and Henan will complete 9 settlement trial runs in a total of 230 days. Shanghai has conducted a power regulation trial run. The longest time is Hubei, the duration is 3 months, the shortest period is Shanghai, and the two power dispatching test runs are 16 days in total.

In non pilot areas, Jiangxi, Ningxia, Hebei Southern Network, Shaanxi and Chongqing have made progress in 2023. On June 20, 2023, Jiangxi will take the lead in completing the first non pilot spot market settlement trial operation in China. Ningxia, Hebei Southern Power Grid, Shaanxi and Chongqing will successively start the settlement trial operation in the second half of 2023. Qinghai and Xinjiang will carry out the simulation trial operation and power regulation trial operation for the first time, and Jilin will carry out the simulation trial operation for the first time.

In 2023, the agency of the National Energy Administration issued power business licenses (power supply) to 13 incremental distribution projects, including 2 pilot projects in the first batch, 2 pilot projects in the second batch, 4 pilot projects in the third batch, 3 pilot projects in the fourth batch, and 2 pilot projects in the fifth batch.

Among the five batches of incremental distribution business pilots, 227 have obtained power business licenses (power supply), accounting for about 50% of the test points. Among the first batch of 94 incremental distribution pilot projects, 77 obtained power business licenses (power supply), with a license rate of 81.9%; In the second batch of 88 incremental distribution pilot projects, 44 have obtained power business licenses (power supply), with a license rate of 50%; 57 of the third batch of 114 incremental distribution pilot projects have obtained power business licenses (power supply), with a license rate of 50%; Among the fourth batch of 84 incremental distribution pilot projects, 34 obtained power business licenses (power supply), with a license rate of 40.47%; Among the 79 pilot incremental distribution projects in the fifth batch, 15 obtained power business licenses (power supply), with a license rate of 18.98%.

In the five batches of pilot projects, 22 evidences were obtained before the pilot approval (stock to incremental projects), 19 in one year, 69 in 1-2 years, 74 in 2-3 years, and 43 in more than three years.