China launched the pilot of green power trading on 7 September 2021. More than 250 domestic and international companies participated in the trade on the first day with a trading volume of 7.9 billion kWh of green power. The trading price was CNY 0.03-0.05/kWh higher than most mid-to-long term (monthly or annual) bilateral contracts, which mainly represent coal power. Taking the Beijing coal grid tariff of CNY 0.37/kWh as an example, this equals a premium of 8-13% over coal electricity prices.
The green power trades also mostly covered monthly or annual contracts and only featured wind and solar power in the initial phase, according to NDRC. The trading market only covers what regulators refer to as “marketized” output—that is, output that exceeds that which already qualified for guaranteed purchases under the feed-in tariff scheme (which has strict limits by province on the maximum operating hours per month that wind and solar plant output will be compensated and guaranteed grid purchase). If consumer demand for such electricity results in a full uptake of all power beyond that already covered by the feed-in tariff and guaranteed purchase hours, consumers can then consider buying power from subsided projects, as well as from the guaranteed purchasing scheme of the grid company. Depending on whether green power derives from the marketized or the guaranteed portion of green power production, funds from the green power purchase price will compensate different entities: if the power stems from marketized power plants, the generators will retain the full premium. If the power is bought from subsidized projects for hours covered by guaranteed purchases, the premium will either offset the subsidy or go to the generator provided. If the power has already been purchased by the grid company under guaranteed purchase, the grid company will keep the premium for future power infrastructure investments. According to the green electricity trading implementation proposal, green electricity is given priority in power market trading and dispatches.
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