Provincial Guidelines for Document 136 Set to Be Announced Soon

Upcoming Release of Provincial Guidelines for Document 136

As of the end of March, the newly installed capacity for photovoltaic (PV) energy reached 59.71 GW, with over 20 GW added in March alone. This surge reflects the ongoing rush in the PV market this year. However, the market is increasingly concerned about the subsequent “cliff-like drop” following this rush: some companies have abruptly halted large-scale equipment procurement, and several enterprises, including state-owned firms, have paused distributed photovoltaic development. This stark contrast in market behavior is largely driven by significant policy changes.

At the beginning of this year, two pivotal policies were issued, steering the PV development towards a high-quality growth phase while completely altering the previous investment ecosystem. Among these, the new regulations for distributed photovoltaic projects define grid connection methods and ratios. The situation is gradually clarifying as provincial guidelines are unveiled. Document 136 undoubtedly impacts investment decisions, project returns, payback periods, and even the survival of numerous enterprises.

During the “2025 Distributed Energy Storage Innovation Forum (Jiangsu Station)” held by Beijing Polaris Solar Energy Network and Polaris Energy Storage Network, it was revealed that the provincial guidelines for Document 136 will soon be disclosed. Early releasing provinces are expected to publish their plans shortly. Previously, the Southern Power Grid published a draft for the “New Energy Participation in the Power Spot Market Working Plan (2025 Edition),” indicating that by the end of April, Guangdong Province’s energy authorities will pilot the implementation of this plan, with Guangxi, Yunnan, Guizhou, and Hainan following by the end of December.

Besides Guangdong, it is reported that another eastern province has already drafted its plan under Document 136, which will soon begin mock bidding. In late April and May, multiple provinces are likely to release their market entry regulations. The provincial task forces include various departments, typically led by the Pricing Department of the Development and Reform Commission for pricing, while the Energy Bureau formulates the energy allocation ratio for wind and solar power, and grid companies are responsible for implementation.

It is important to note that due to varying progress rates, the number of bidding opportunities for newly added projects this year will differ across provinces, with some early-releasing provinces organizing two bidding sessions mid-year and at year-end. The focus on equal treatment for distributed photovoltaic projects will further concentrate on bidding for new projects. According to Document 136, new energy projects commencing operations on or after June 1, 2025, will be categorized by technology type for bidding; thus, wind and solar will participate separately.

The industry has been particularly interested in whether centralized and distributed photovoltaics will have separate bidding processes. From what is known, distributed photovoltaics will not receive special treatment. To prevent malicious bidding, some provinces require projects participating in market-based bidding to provide a 10% bank guarantee. Additionally, individual household photovoltaic systems will also be treated equally and must participate as legal entities, meaning individual projects will need to engage third-party aggregators. Non-individual household photovoltaic projects can enter the market under their project company names and participate in both spot and medium-to-long-term trading, although smaller project companies may struggle to secure bank guarantees.

It is notable that project bidding requires regulatory approval, but as the rush subsides, securing these approvals for new projects is likely to become more challenging, leading to the possibility that distributed photovoltaic projects may miss the upcoming bidding sessions in early June in some early-releasing provinces. This implies that before the next round of bidding, particularly in spot market regions, distributed photovoltaic projects might not benefit from regulated prices and will have to accept market prices.

Cautious Selection of Mechanism Electricity

The mechanism for electricity pricing will undoubtedly provide a safety net for most new energy projects, ensuring that investors have reasonable and stable expectations, thus promoting the steady and healthy development of the industry. Under the mechanism rules, the pricing formula for photovoltaic projects will shift to: non-mechanism electricity × market transaction price + mechanism electricity × (mechanism price – real-time market average price + market transaction price).

According to the official interpretation of Document 136, when market transaction prices fall below the mechanism price, a price difference compensation will be provided; when above, the difference will be deducted. The determination of whether to refund or supplement will rely solely on the comparison between the market average transaction price and the mechanism price, independent of individual project quotes.

Another aspect not to be overlooked is the system adjustment costs, which were previously borne mainly by large ground stations and commercial plants above 10 kV. In the future, it is possible that low-voltage sides may also need to absorb these costs, meaning the final settlement price will also need to account for system adjustment fees. Therefore, it will be crucial for new energy projects to carefully consider entering the mechanism electricity framework; for projects with strong operational capabilities and superior trading strategies, direct market transactions may yield higher returns.

It is important to note that Document 136 stipulates that new energy projects that reach their deadline or voluntarily exit within the timeframe will no longer be included under the mechanism, meaning once exited, they cannot re-enter.

Regarding the second half of the photovoltaic sector, experts advise the market not to be overly pessimistic, especially in areas with good absorption conditions. The guidelines under Document 136 will ensure smooth market entry and healthy development for new energy projects by considering existing policies, market absorption capacity, trading prices, user price acceptance, resource development potential, and costs.