Impact of Market-Oriented Reform on Renewable Energy Pricing
In just over two weeks, the renewable energy industry will face a significant assessment. According to the National Development and Reform Commission and the National Energy Administration’s recent notice, starting June 1, all renewable energy projects (including wind and solar power) will primarily enter the electricity market, with pricing determined through market transactions. This shift is expected to reshape investment logic—from a focus on scale to a collaboration between quantity and price—favoring regions with strong consumption capacity and higher electricity prices.
At a recent forum on renewable energy development, industry experts discussed the implications of this reform. Liu Yiyang, Executive Secretary of the China Photovoltaic Industry Association, highlighted the challenges posed by rapid growth in photovoltaic installations. He noted that as renewable energy penetration increases, prices are declining due to supply and demand dynamics, leading to issues in energy absorption in certain areas.
This new pricing mechanism aims to leverage market forces for resource allocation, indicating a gradual phase-out of the dual-track system of planned and market electricity. Zhang Jiali, Deputy Director of the New Energy Research Institute at the Hydraulic and Hydropower Planning and Design Institute, emphasized that large-scale development of renewable energy will necessitate higher demands on the new power system. Current uncertainties in pricing policies and revenue generation must be addressed through revised investment models.
Despite these challenges, new opportunities are emerging. Liu pointed out that the mechanism will settle prices through monthly trading averages, mitigating market volatility while allowing companies to optimize project layouts for higher returns. Regions like Shandong and Jiangsu, with strong electricity demand, are well-positioned to benefit from this transition, particularly with the introduction of support policies like green certificate issuance, which enhance the environmental premium of renewable energy.
As market-oriented pricing approaches generation costs, it signals a pathway to high-quality development in the industry. This shift will guide investment strategies toward areas with robust consumption and favorable price levels, utilizing mechanisms such as spot market node pricing and capacity compensation to ensure precise project implementation.
Facing these changes, Zhang called for a multi-faceted approach within the industry: enhancing quality while expanding capacity, accelerating resource surveys, innovating collaborative models for energy absorption, and improving distributed energy utilization. Companies should also focus on technological innovation—optimizing site selection, accurate power forecasting, and enhancing energy marketing capabilities, as well as promoting complementary energy sources.
According to Zhang Chong, Senior Supervisor at the State Power Investment Corporation, the reform will push the pricing mechanism towards deeper marketization. He indicated that the corporation is addressing these challenges through innovative planning, expanding application scenarios, and utilizing AI technology for price prediction and investment decision support.
In conclusion, the implementation of this notice represents a pivotal moment in the development of renewable energy, presenting both challenges and opportunities for industry transformation.
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