By tf-lawyer.com On October 15, after nearly 1,000 days of practical trials, the inter-provincial spot electricity market in China officially began operations, marking a significant advancement in the country’s power system reform efforts.
Since the inception of the latest round of electricity reform in 2015, the push toward marketization has gained momentum across various provinces. With medium- and long-term trading becoming increasingly sophisticated, establishing the framework and mechanisms for the electricity spot market has emerged as a crucial aspect of these reforms.
The spot market primarily facilitates trading in day-ahead, intraday, and real-time electricity, as well as auxiliary services like standby and frequency modulation. For consumers, it offers access to pricing information; for the grid, it provides market-driven solutions for short-term supply and demand balance; and for renewable energy sources, it accommodates their inherent volatility and randomness, thereby enhancing their integration into the energy system.
The inter-provincial electricity spot market has been designed to optimize the allocation of electricity resources across vast regions, adapt to the rapid growth of renewable energy, and ensure smooth connections between inter- and intra-provincial markets. After years of exploration and practice, it reflects the unique conditions of China’s electricity networks.
Wang Delin, deputy chief engineer at the National Electricity Dispatching and Control Center, explained that this inter-provincial market effectively mirrors supply and demand dynamics, creating a market price mechanism that allows for fluctuations. This approach recognizes the time and spatial value of electricity.
Since its pilot launch in January 2022, the market has evolved from facilitating cross-regional trading of surplus renewable energy to covering expansive areas, now including the State Grid and the Inner Mongolia West Grid. This growth has significantly enhanced inter-provincial electricity cooperation, ensured power supply stability, and supported the consumption of clean energy.
The transition to formal operation for the inter-provincial spot market is set to further optimize the allocation of electricity resources, ensuring reliable power supply and enabling broader integration of renewable energy, thus contributing to the green and low-carbon transformation of the energy sector.
Yang Kun, Executive Vice President of the China Electricity Council, noted the rapid increase in renewable energy capacity in China, which has maintained the largest installed renewable energy capacity in the world for several consecutive years. The inter-provincial electricity spot market has played a key role in promoting the consumption of this renewable energy, with nearly 40 billion kilowatt-hours absorbed by the market as of September this year.
As the inter-provincial spot market moves to full operation, it will further enhance price signaling, facilitating economically efficient allocation of electricity resources.
China has established the world’s largest electricity grid, providing a solid foundation for resource distribution. Driven by the “dual carbon” goals, the construction of a new power system is advancing rapidly, bringing profound changes to the basic forms and operational characteristics of the electricity system and raising new standards for a unified national electricity market.
Experts emphasize the importance of promoting efficient cooperation across market levels, innovating trading mechanisms, enhancing compliance management and risk prevention systems, and improving the market’s operational standards to elevate the construction of a unified national electricity market to new heights.
