State Council issues guidelines on accelerating national power system integration
China’s power market integration drive is shifting into higher gear.
On February 11, the State Council issued guidelines on advancing the buildout of China’s landmark Unified National Power Market (UNPM).
The challenge: China’s provinces have traditionally relied on internally generated, heavily regulated coal-fired power to meet most of their electricity demand – but the energy transition requires a shift toward a more volatile, geographically dispersed, renewables-heavy supply mix.
- That makes a truly integrated national market essential to efficiently moving power across regions, smoothing supply fluctuations, and keeping the lights on.
The guidelines focus on accelerating market reforms and removing barriers hindering the UNPM, calling for:
- Continued reforms to bring most power generators and end users into market-based electricity trading – targeting 70% of national electricity consumption to be traded via market mechanisms rather than fixed government pricing by 2030, up from 64% today
- Completion of the UNPM by 2035, with seamlessly integrated intra- and interprovincial power markets and all power trading fully governed by market mechanisms
Get smart: The UNPM, together with accelerated provincial-level market liberalization, will reshape industrial power procurement and power generators' business models.
- This shift will create real risks for firms still anchored in the old model – but also major upside for those with the sophistication to navigate a more dynamic, market-driven system.