Time ripe for a diversified, competitive power market

The central authorities recently reviewed and adopted a guideline document on the construction of a unified national electricity market system.

It said the country should set up and improve a multi-level unified power market, and standardize unified power trading rules and technical standards to promote the formation of a power market pattern characterized by diversified competition.

In recent years, China has made remarkable achievements in electricity market reform.

However, the deepening of reform has exposed some deep-rooted and fundamental problems, such as the lack of top-level design and a clear implementation path, and sluggish progress in promoting the use of clean energy consumption. These need to be addressed through reform.

The construction of a national unified power market system is an important way to deepen the power market reform. In 2015, it was proposed that a power market system marked by fair competition and open, orderly and healthy development be gradually established nationwide. In line with the proposal, in 2020 the central government suggested a unified national electricity trading system be established by the end of 2025.

The latest meeting has put forward clear requirements for building such a system. These include following the operation rules of the power market and the law of a market economy, realizing the sharing and optimized allocation of power resources within a broader scope, and accelerating the formation of a unified open, orderly, safe and efficient power market governance system.

To accelerate the construction of such a system, China must reform and improve the market-oriented formation of coal and electricity pricing mechanisms, improve the electricity price transmission mechanism, and strike a balance between power supply and demand.

It should also promote the construction of an electricity market mechanism that adapts to the transformation of the energy structure, promotes the orderly participation of new energy in market transactions through market-oriented means, and gives play to the supporting role of the electricity market in the transformation of clean and low-carbon energy.

The marketized power pricing system is the only way to transform the energy sector. Only on this basis can the country make an effective and stable transition from traditional to new energy.

It should give full play to the role of a unified power market system, introduce market-oriented mechanisms such as preferential trading of clean energy, and provide a strong guarantee for the construction of a new power system dominated by new energy.