Promoting the Development of New Power Business Entities Across Multiple Regions

Recently, various regions have implemented policies to accelerate the development of new power business entities in the electricity sector, including distributed power sources, adjustable loads, and load aggregators. The National Energy Administration’s Guidelines for Supporting the Innovative Development of New Business Entities in the Electricity Sector states that new business entities refer to various resources in the distribution segment that possess the ability to regulate electricity and electric quantity, characterized by new technologies and operational models. Among these, the single-technology new business entities primarily include distributed photovoltaics, decentralized wind power, and energy storage, while resource aggregation new business entities mainly consist of virtual power plants (load aggregators) and smart microgrids.

The development of these new business entities aims to aggregate scattered power resources, enhancing the power system’s regulatory capability and facilitating the absorption of renewable energy. This initiative supports the acceleration of building a new power system and achieving the “dual carbon” goals.

Financial Support for Resource Aggregation

As the construction of the new power system and electricity market progresses, the role of resource aggregation new business entities becomes increasingly significant. To expedite the development of virtual power plants, the Energy Bureau of Guizhou Province released the Implementation Plan for the Gradual Advancement of Virtual Power Plant Development on May 19. This plan aims to establish a sound management mechanism for the construction and operation of virtual power plants by 2027, nurturing at least 10 operational entities with a total regulatory capacity exceeding 1 million kilowatts, targeting 1.5 million kilowatts. The plan includes a financial subsidy scheme: a one-time subsidy of 10,000 yuan per megawatt for virtual power plants included in the annual construction plan and completed on schedule, with a maximum funding limit of 300,000 yuan per project.

Other regions are also providing financial support, with Shanghai offering even more substantial incentives. The Shanghai Municipal Development and Reform Commission issued the Management Measures for Reward Funds for the Regulatory Capability of New Power Systems on May 16, stating that for virtual power plant resource aggregation platforms, a reward of 50 yuan per kilowatt per year is available based on regulatory capacity, with a maximum annual reward of 1.5 million yuan per platform for three years. Additionally, the Tianjin Municipal Bureau of Industry and Information Technology released the Implementation Details for Electricity Demand-Side Management on May 15, encouraging various market entities to actively promote rooftop photovoltaic construction and the integrated application of photovoltaic energy in buildings, thereby enhancing the proportion of renewable energy consumption.

Notably, the Beijing-Tianjin-Hebei region plans to collaborate on supporting the development of new business entities. The Beijing Renewable Energy Development and Utilization Regulations, effective May 1, mention establishing a cooperative mechanism for renewable energy development and utilization with Tianjin and Hebei, focusing on resource development, facility interconnection, technological innovation, industrial development, and market construction.

Integration of Multiple Entities to Enhance Regulatory Capabilities

Various regions are providing substantial financial support for the development of new business entities, with a key objective being to enhance the flexibility of the power system. The previously mentioned Shanghai Management Measures also extend rewards to electric vehicle charging and discharging (V2G) and new energy storage projects. V2G rewards are based on regulatory capacity assessments from grid companies, while storage project rewards are directly linked to actual discharge amounts. The Guizhou Implementation Plan also emphasizes integrating storage projects into the unified dispatch and operation of virtual power plants, actively expanding resource aggregation scenarios such as charging and swapping stations and interactions between vehicles and the grid, thereby effectively mobilizing various dispersed resources and improving grid regulatory capabilities.

Under the integrated development of new business entities, grid companies are also actively assisting relevant entities in connecting to the power system while ensuring the safe and stable operation of the electricity grid and meeting the demand for distributed energy absorption. On May 19, the Henan Energy Regulatory Office released the Work Plan for Enhancing Network Safety Capacity of New Energy and New Grid-Connected Entities, proposing improvements in the monitoring and regulatory capabilities of the power system for distributed renewable energy. In terms of observable data, the plan aims for real-time data collection at minute-level frequency (within 5 minutes) and reducing dispatch data latency to less than 3 minutes.

The Tianjin Implementation Details for Electricity Demand-Side Management suggest that electricity users should fully exploit flexible and adjustable load resources from storage and distributed power sources or aggregate flexible loads through load aggregators to participate in demand response. Grid companies are encouraged to enhance the flexibility, reliability, and intelligence of grid operations, ensuring grid safety.

New Regulations for Auxiliary Services Market Emphasize Revenue Opportunities for New Entities

New business entities are emerging participants in the electricity market. With the rapid increase in the share of renewable energy generation and the accelerated construction of new power systems, the market scale for new business entities will continue to expand, and their business models will diversify. The electricity market mechanisms in China require further improvement to enhance the roles of new business entities. On April 29, the National Development and Reform Commission and the National Energy Administration jointly issued the Basic Rules for the Electricity Auxiliary Services Market, clearly stating that according to the principle of “who provides, who profits; who benefits, who bears,” a cost-sharing and fee transmission mechanism for auxiliary service fees should be established to promote shared responsibility among supply and demand entities and ensure fair service provision and compensation.

The document specifically clarifies the status of operational entities such as energy storage companies, virtual power plants, smart microgrids, and vehicle-to-grid operators, guiding new business entities to participate in regulation. Following the issuance of these rules, new business entities across various regions are presented with market development opportunities. Energy storage can leverage its rapid response and bidirectional regulation advantages to participate in several auxiliary service markets, such as frequency regulation and backup services. Virtual power plants can adjust the output of distributed resources in real-time through intelligent scheduling systems, meeting the auxiliary service needs of the grid and maximizing overall revenue. Smart microgrids can provide peak shaving services by adjusting internal loads and distributed resources. The Hunan Energy Regulatory Office recently responded by deepening the construction of the auxiliary services market, incentivizing large-scale applications of energy storage, focusing on revising rules such as the Hunan Electricity Auxiliary Services Market Rules.

The Chongqing Energy Bureau has also stated its commitment to promoting the establishment of auxiliary service market rules, in collaboration with the Central China Energy Regulatory Bureau, to gradually develop a market mechanism guided by regulatory effectiveness and encourage participation from storage and other operational entities in the electricity market.

During a press conference held by the Shandong Provincial People’s Government on May 15, Meng Fanzhi, a member of the Party Leadership Group and Deputy Director of the Shandong Energy Bureau, announced plans to actively promote the participation of energy storage in the frequency regulation auxiliary services market. They aim to gradually add varieties of auxiliary services such as backup, phase adjustment, and black start, support energy storage’s participation in real-time energy trading, and accelerate the establishment of a trading model that integrates multiple uses over time. This approach will fully utilize the rapid response and regulatory advantages of energy storage, reduce the operational costs of independent energy storage, and ensure that independent energy storage supplying electricity to the grid is exempt from transmission and distribution prices and government funds, enhancing the profitability of energy storage stations.