On 27 January 2025, China’s National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) jointly issued a policy titled “Notice on Deepening the Marketisation Reform of Feed-in Tariffs for New Energy to Promote High-Quality Development of New Energy”. This policy marks a shift in China’s approach to pricing wind and solar power, transitioning from fixed tariffs to a market-based system.
The policy allows market mechanisms to determine the feed-in tariffs for wind and solar power in China. It seeks to make resource allocation more efficient, promote a fair competition, and contribute to the sustainable development of the renewable energy industry. This shift aligns with China’s broader strategy to build a modernised power system and achieve its carbon neutrality targets.
The policy delineates distinct rules for projects based on their commissioning dates. For wind and solar projects commissioned before 1 June 2025, the current pricing mechanism is applicable, ensuring price stability. The feed-in tariffs for these projects will not exceed the local benchmark prices for coal-fired generation. Projects commissioned after 1 June 2025 will follow the market-based pricing. The electricity price will be entirely determined by competitive bidding, with an upper price limit set by local authorities. Projects with electricity prices set in that way will participate in a price difference settlement mechanism, which will be established outside the market. The settlement mechanism is similar to a contract for differences and will compensate projects for the difference when the market price is below the mechanism price, while it deducts the excess when the market price is higher. Grid companies will be responsible for carrying out price difference settlements, with the settlement costs included in local system operating costs.
It also calls for enhancing market trading rules by improving the spot and long-term power market mechanisms. It emphasises the need to refine both spot market transactions and long-term power trading mechanisms. This includes adjusting trading cycles, increasing transaction frequencies, and allowing flexibility in contract terms to better accommodate the characteristics of renewable generation.
The policy promotes green electricity trading by encouraging the development of green electricity trading markets, where renewable energy certificates (green certificates) can be traded. This initiative aims to standardise trading practices across regions and reduce reliance on subsidies.
It underscores the importance of policy coordination recognising the complexity of this transition. Provinces are mandated to finalise and implement their specific plans by the end of 2025. These plans should align with national renewable energy development goals and ensure a smooth transition to the new pricing mechanism. The policy calls for active engagement with stakeholders, including energy producers, grid operators, and consumers, to address concerns and ensure that the reform’s objectives are met without causing undue disruptions.
Original Policy: 国家发展改革委 国家能源局关于深化新能源上网电价市场化改革 促进新能源高质量发展的通知_国务院部门文件_中国政府网
