New Regulations on Local Utilization of Renewable Energy Come into Effect Today

New Regulations for “Proximity Consumption” of Renewable Energy Come into Effect Today!

As of October 1, 2025, new regulations issued by the National Development and Reform Commission and the National Energy Administration regarding the enhancement of pricing mechanisms to promote the local consumption of renewable energy will be implemented. The notice states that proximity consumption projects will have equal participation rights in the electricity market, sharing the same market status as other power generation companies and electricity users.

The renewable energy generated by these proximity consumption projects will primarily be for self-use. For qualified proximity consumption projects, the public grid must provide connection and power supply services as stipulated, ensuring reliable electricity supply based on connection capacity. This guarantees that the project can operate safely and stably even during periods of insufficient generation.

The electricity source for proximity consumption projects should connect to the user side of the property boundary with the public grid. The annual self-consumed renewable energy must account for no less than 60% of the total available generation capacity and at least 30% of the total electricity consumption; from 2030 onwards, newly added projects must maintain a minimum of 35%. Additionally, these projects must have conditions for sub-metering, with metering devices installed by the grid companies at various points such as generation, on-site usage, grid connection, self-consumption, and energy storage to accurately measure electricity data.

The original document outlines the following points:

1. Public Grid to Provide Stable Supply Assurance Services

Proximity consumption projects, which connect their sources, loads, and energy storage systems as a whole to the public grid, forming clear physical and safety responsibility boundaries, will receive reliable supply services from the public grid according to their connection capacity.

2. Fair Cost Sharing for Stable Supply Assurance

In accordance with the principle of “who benefits, who bears the cost,” proximity consumption projects will fairly share the costs for transmission and distribution fees and system operation fees. Projects not connected to the public grid are exempt from these fees. The transmission and distribution fees will be calculated based on capacity, with details provided in the notification.

3. Equal Participation in the Electricity Market

Proximity consumption projects will have equal market status with other power generation companies and electricity users and will participate as a unified whole in the electricity market. In areas with continuous operation of the spot market, transactions and price settlements will follow market rules. In areas without continuous operation, projects will not send electricity back to the public grid.

4. Implementation and Organization

Provincial price authorities will monitor and evaluate the implementation of these regulations, providing timely feedback and suggestions. Project owners must apply for grid connection after filing with local authorities and negotiate contracts with grid companies to clarify responsibilities.

This notification will take effect on October 1, 2025. Existing projects that have connected to the grid prior to this date will be managed by local price authorities for a smooth transition.

The National Development and Reform Commission provided an official interpretation of key issues in this document on September 9, 2025.

Key Questions and Answers

Q: What is the background for these policy implementations?

A: In recent years, China has achieved remarkable success in the large-scale development of renewable energy, but faces challenges such as difficulties in consumption and increased pressure on the power system. New models for consuming renewable energy, such as green electricity direct connections and zero-carbon parks, have been explored to alleviate these challenges.

Q: What conditions must proximity consumption projects meet?

A: These projects must establish clear interfaces with the public grid and be capable of accurate metering. The renewable energy self-consumption must meet specified ratios of total generation and consumption.

Q: How will proximity consumption projects pay for utility fees?

A: These projects will pay utility fees based on their connection capacity, differing from typical commercial users, as they require stable supply assurance services from the power system.

Q: How do these projects participate in the electricity market?

A: These projects will engage in the market as equal players, with specific rules for transactions based on whether the spot market is operational.

Q: What impact will the updated pricing mechanism have?

A: The refined pricing mechanism aims to clarify project boundaries and responsibilities, facilitating the rapid development of proximity consumption and positively impacting the renewable energy sector and the overall power system.