context: The new electricity spot market rules are similar to the draft released for comment in November 2022. More detailed policies on implementation will follow at the provincial level. According to the timeline for setting up the ‘unified national power market’, spot markets should be running and integrated with medium and long-term markets, as well as ancillary service markets by 2025.
Electricity spot markets around the country will be standardised and managed in accordance with the new ‘Electricity spot market basic rules (trial)’, issued by NDRC (National Development and Reform Commission) and NEA (National Energy Administration) on 18 Sep 2023.
The aim of spot markets, per the rules, is to
- form power price signals that reflect time, space and the balance of supply and demand
- give full play to the role of markets in resource allocation
- enhance the power system’s adjustment capacity
- promote consumption of renewable power
- ensure reliable electricity supply
- guide long-term planning and investment
- promote the transition to a clean, low-carbon, secure and efficient power system
Spot market pilots have proceeded in various locations, but the new rules attempt to incorporate lessons from these pilots into a unified, standardised playbook for provinces to roll out spot markets.
The rules lay out tasks relevant to power market players
- promoting the participation of renewables and storage in spot markets in an orderly manner
- adapting market mechanisms to the characteristics of renewables
- linking spot markets to renewable power guarantee policies
- promoting participation of distributed renewables, load aggregators, energy storage and VPPs (virtual power plants) in spot markets
The rules also call on regulators to
- gradually introduce other players into interprovincial markets
- allow all types of generators, users and retailers to participate in spot markets
- strengthen linkages between provincial and interprovincial markets
- strengthen the linkage between spot and mid- to long-term markets
- by transitioning mid- to long-term trading to timed-based trading, increasing trading frequency and shortening trading periods
- explore the introduction of market-oriented capacity compensation mechanisms
- explore the introduction of capacity markets, where conditions permit
The rules lay out several mid- to long-term actions
- linking provincial markets to a national market
- continuously promoting the participation of all kinds of players in spot markets
- expanding the scope of new players and transactions
Bringing users into spot markets is key, as they will respond by conserving electricity and increasing efficiency, according to Xue Jing 薛静 CEC (China Electricity Council) former departmental director.