southern regional electricity spot market taking shape

context: Electricity spot market reforms will be guided and expedited by the new central rules that became clearer in September 2023. Guangdong was one of eight jurisdictions named in the first batch of electricity spot market pilots launched in 2017. Guangdong has also set up capacity markets and ancillary service markets and is relatively advanced in reforming its power sector. 

Following successful simulation trials in July and December 2022, a final round of preliminary tests in the Southern Regional Electricity Spot Market will be completed before the end of 2023, according to Southern Grid. If everything goes smoothly, the market should go live in 2024.

The emergent market is the PRC’s most advanced spot market pilot to date. The pilot expands Guangdong’s electricity spot market to integrate Guangxi, Yunnan, Guizhou and Hainan, covering the entire Southern Grid operating area. The southern region is essentially ready to begin interprovincial trading, according to Southern Grid.

The pilot is a testing ground for regional spot market creation; its development will inform similar regional integration in the Yangtze Delta region and pave the way towards a national spot market.

The southern region presents a significant proving ground for leveraging spot markets’ allocative efficiency given the major imbalances in intra-provincial supply and demand in the region. For instance, hydro-rich Yunnan exports nearly half of its electricity, while imports meet a third of the demand in power-hungry Guangdong.

The regional spot market will feature day-ahead and real-time markets. 

It is still unclear as to whether the interprovincial spot market will operate alongside Guangdong’s intra-provincial market or replace it, writes Jiemian