Clean energy: China to allow solar, wind power prices to be set by market forces

The price of electricity produced from renewable energy in mainland China will be set by market forces rather than fixed by authorities, as the country seeks to modernise its power sector and advance the development of clean energy.

The National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) jointly issued a notice on Sunday about deepening the “market-oriented reform” of pricing for renewable electricity.

The price of on-grid electricity generated from renewable sources such as wind and solar, previously fixed, would be determined by market mechanisms in the country’s power market, the notices said.

“With the large-scale development of new energy, the fixed pricing for on-grid electricity cannot accurately reflect market supply and demand and does not share its responsibility for regulating the power system,” the authorities said.

The NDRC ordered local governments to introduce their own plans for the change by the end of this year.

China’s installed capacity for renewable power, led by wind and solar, reached 1,410 gigawatts (GW) in 2024, accounting for more than 40 per cent of the country’s total installed power capacity while surpassing coal, according to NEA.

Given the increasingly important role renewable energy is playing in China’s power system, setting regulations on the renewable tariff mechanism has become more important, Pierre Lau, head of Asian utilities and clean energy research at Citigroup, said in a report on Monday.