China has announced a significant policy shift [1], allowing market forces to determine the prices of renewable electricity. The National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) have agreed to scrap fixed pricing on renewable power, enabling electricity generated by renewables to be freely traded.
This move is aimed at modernizing China’s power sector and advancing clean energy development. The central government has tasked local authorities with proposing and implementing market pricing by the end of the year. Generators will be cushioned from excessive price swings through balancing payments, similar to contracts for differences in the UK.
The policy change differentiates between old and new renewable power based on a June 1 cutoff. Wind and solar projects installed before this date will be compensated according to current rules, while those commissioned after will be assessed on potentially less favorable terms.
China, the world’s largest emitter of greenhouse gases and the biggest operator of renewable power has seen its installed capacity of renewables, including wind and solar, climb to 1,410 gigawatts last year. This policy shift is expected to set a solid foundation for constructing a unified national electricity market system.
The NDRC and NEA have assured that the new rules will not impact prices paid by residential and farming customers, and that prices for industrial and commercial users won’t change significantly in the first year. The aim is to achieve more flexible pricing without pushing up power tariff costs for end users.
This policy change is seen as a breakthrough that reflects China’s continued push to shift the maturing renewable energy sector away from subsidies. It is expected to encourage more installations by developers keen to retain existing price protections before the cutoff date.
Sources:
[1] China Takes Big Step in Letting Market Decide Clean Power Prices https://www.energyconnects.com/news/renewables/2025/february/china-takes-big-step-in-letting-market-decide-clean-power-prices/