Powering up new energy via market pricing

The central departments issued a notice aiming to push new energies, such as wind power and solar energy, into the electricity market with their grid-connected electricity prices determined by the market rather than the former fixed model.

The launch of the reform may bring about some changes. The "survival of the fittest" among new energy companies will accelerate, and companies with high power generation costs and backward technology may be eliminated due to bidding disadvantages; while companies with efficient energy storage, intelligent output prediction, and strong ability to participate in green electricity transactions will have an advantage.

Green electricity consumption is ushering in a period of explosive growth. The new policy clarifies the separation of green certificate prices from electricity prices, and users who purchase green electricity need to pay additional green certificate fees. This move will encourage companies to accelerate the purchase of green electricity to meet environmental, social, and governance requirements or export needs, and stimulate the expansion of the green certificate trading market.

Electricity price fluctuations may become the norm. After the price limit in the spot market is relaxed, electricity prices may experience short-term sharp fluctuations in extreme weather or when relations between supply and demand are tense. Industrial and commercial users need to hedge risks through medium- and long-term contracts, energy storage configuration, and other means.

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