The State Council issues a document: By 2030, a unified national electricity market system will be basically established.

On February 11, the General Office of the State Council issued the “Implementation Opinions on Improving the National Unified Electricity Market System” (hereinafter referred to as the “Implementation Opinions”).

The “Implementation Opinions” clarify that by 2030, a basically complete national unified electricity market system will be established, with all types of power sources and electricity users, except for guaranteed users, directly participating in the electricity market, and market-based transactions accounting for about 70% of the total social electricity consumption. By 2035, a fully developed national unified electricity market system will be in place, with market functions further matured and improved, and the proportion of market-based transactions steadily increasing.

The “Implementation Opinions” propose promoting the optimal allocation of electricity resources nationwide, improving various functions of the electricity market, encouraging broad and equal participation of various market entities, and building a unified national electricity market institutional system.

Several industry insiders told 21st Century Business Herald that the release of the “Implementation Opinions” marks the elevation of electricity market reform from departmental promotion to a national strategic deployment. The document sets forth principles and goals for the top-level design of the national unified electricity market, providing direction and pathways for deepening the construction of the national unified market in response to new circumstances and requirements.

By 2030, a basically complete national unified electricity market system will be established

Improving the national unified electricity market system is a key institutional guarantee for promoting the construction of a new power system.

“2026 marks the beginning of the ‘14th Five-Year Plan’ and is also the starting point for the national unified electricity market to move from initial establishment toward basic completion,” said Yang Kun, Secretary of the Party Committee and Executive Vice President of the China Electricity Council, to 21st Century Business Herald. Based on the new development stage, the “Implementation Opinions” scientifically set two key strategic milestones: “basically completed” by 2030 and “fully completed” by 2035, outlining clear development goals and implementation pathways for the next decade of the national unified electricity market.

The “Implementation Opinions” address key issues such as breaking market barriers, promoting participation of multiple entities, improving capacity assurance mechanisms, and facilitating transmission price transmission, proposing systematic reform measures. Yang Kun believes these are mainly reflected in the following aspects:

First, further breaking down market barriers to promote the optimal allocation of electricity resources nationwide, achieving “electricity transmission across the country.” The “Implementation Opinions” further clarify the pathways for removing trading barriers and promoting market integration. They propose exploring market integration development plans, encouraging neighboring provinces to voluntarily “roll snowballs” in organizing electricity trading, and expanding market scale. They introduce joint trading models, where market participants only need to submit demand and price requirements once to match supply and demand across the country, significantly improving transaction timeliness and flexibility. They also call for the rapid realization of normal cross-regional trading, with the gradual commissioning of cross-regional transmission channels such as Qing-Gui and Tibetan-Guan, fully integrating regional markets, and relying on the national interconnected large power grid to form a unified national electricity market.

Second, promoting broad and equal market entry for various market entities to form a diverse and competitive market landscape. The “Implementation Opinions” further specify entry pathways: phased promotion of power sources such as gas, hydro, and nuclear; participation of “Shagehuang” new energy bases through joint ventures; participation of distributed renewable energy via aggregation trading and other modes; and encouraging flexible participation of virtual power plants, smart microgrids, and controllable loads.

Third, continuously deepening market mechanism construction to further expand market functions. Building an electricity spot market requires effective capacity assurance mechanisms. The “Implementation Opinions” propose further improving capacity pricing mechanisms for coal-fired power, pumped storage, and new energy storage resources, ensuring effective transmission of auxiliary service costs in continuous operation areas, and exploring capacity markets when conditions are mature, to provide a solid guarantee for long-term safe and orderly system operation through ongoing market mechanism improvements.

Fourth, strengthening management of power sales companies to create a standardized, orderly, convenient, and efficient retail market. The “Implementation Opinions” emphasize the need for prompt formulation of retail market trading rules, revision of management measures for power sales companies, and further leveraging their role as bridges connecting wholesale and retail markets. They also call for smoothing transmission of wholesale and retail prices, using time-of-use pricing signals to guide demand-side resources to actively participate in system regulation, and stimulating the flexibility potential of the power system.

Improving the functions of six major markets: spot, medium- and long-term, ancillary services, green power, capacity, and retail

The “Implementation Opinions” further clarify the functions of the six major markets: establishing a more effective spot market for price discovery and supply-demand regulation; continuously improving the medium- and long-term markets to ensure power supply stability; accelerating the development of ancillary service markets to support system flexibility; enhancing green power markets to better realize environmental values; establishing reliable capacity markets to support the construction of flexible power sources; and creating a standardized, orderly, convenient, and efficient retail market.

He Jijiang, Executive Deputy Director of the Energy Transition and Social Development Research Center at Tsinghua University’s School of Social Sciences, told 21st Century Business Herald that the pricing system of these six markets marks a milestone in China’s power market development. It shifts away from the traditional “single quantity-based pricing” logic, moving dispatching from “plan-driven” to “market-driven,” providing a solid market foundation for new power systems. The new pricing system strongly supports the “dual carbon” goals through comprehensive value quantification and green low-carbon market incentives, maximizing the absorption of volatile wind and solar power, and promoting an energy structure transformation from fossil fuels to renewable energy as the mainstay.

Liu Dunnan, Professor at North China Electric Power University and Secretary-General of the China Energy Research Society’s Energy Internet Committee, said that establishing a multi-value market means that price signals will no longer be just settlement tools for current transactions but will truly guide future investment directions and transformation pathways. Building a unified national power market essentially creates a forward-looking investment guidance mechanism for renewable energy, energy storage, and various new grid-connected devices. Signals lead investments, and prices reflect scarcity—this is the advantage of a market over planning.

“For example, for coal-fired power, to achieve longer-term viability in a new power system, the main battlefield of competition should no longer be simply providing electricity, but rather emphasizing its value in flexible regulation and reliability support,” Liu Dunnan said. Through capacity markets and ancillary services, the peak, backup, and rapid ramp-up values of coal power can be effectively quantified; meanwhile, green market signals will also push coal power to accelerate clean transformation, helping existing units find new ecological niches in low-carbon transitions.

It is noteworthy that the “Implementation Opinions” propose to continuously strengthen green power consumption tracing and explore the feasibility of including green certificates in carbon emission accounting. They also aim to improve green power standards, strengthen international communication and dialogue on green certificate application and accounting, and promote the transformation of China’s green power consumption standards into international standards.

Lin Boqiang, Director of the China Energy Policy Research Institute at Xiamen University, said that an important background for current power market reform is energy transition. Wind and solar are being pushed into the market, but they still face relative disadvantages in price competition. Green power and green certificates are crucial tools to address this shortcoming and support the market-oriented development of new energy. To truly realize their value, green power and certificates need to be smoothly integrated with international markets. Different resource endowments and standards across countries mean that recognition of green certificates varies; future efforts should actively participate in international rule-making, promoting alignment of China’s green power certificates with international systems in certification and mutual recognition—an inevitable choice for participating in global green governance.

(Article source: 21st Century Business Herald)