Learn how we are working to transform how we use and produce energy.
2026 China Power Market Outlook: 10 Key Trends for Market Players
What market players need to watch as China’s electricity system becomes more market-oriented, flexible, and renewables-driven.
Why we share this work for free
RMI is an independent nonprofit working to accelerate the clean energy transition. We publish research like this to inform decision-makers and drive real-world impact.
Our work is supported by philanthropy as well as partnerships, including fee-for-service engagements. This support makes it possible for us to share our independent insights for free.
If you find this work valuable, you can support it anytime.
Get more insights like this
Stay up to date with the latest research, analysis, and tools from RMI by opting in to receive occasional emails below. You’ll get new reports, event invitations, and practical insights to help us all accelerate the clean energy transition.
Loading form...
Your download should start automatically. If it doesn’t, click the download button below.
This work is made possible by philanthropy
RMI is a nonprofit supported by donors and partners. Philanthropy enables us to produce independent research and make resources like this freely available.
If you find this report valuable, please consider supporting our work. You can also explore how we partner with organizations to drive impact.
Jump to Section
The year 2026 marks the beginning of China’s 15th Five-Year Plan period and a new stage in the development of the unified national power market system. In February 2026, the General Office of the State Council issued the Implementation Opinions on Improving the National Unified Power Market System — Document No. 4 — a landmark policy following the 2015 Opinions on Further Deepening Power Sector Reform — Document No. 9.
Document No. 4 sets out the roadmap for improving China’s unified national power market system over the next five to ten years. By 2030, the system is expected to be largely complete, with all power sources and electricity users, except those under guaranteed supply arrangements, directly participating in the market. By 2035, the unified national power market system is expected to be fully established, with more mature market functions.
Over time, China’s power markets are expected to more fully reflect the multidimensional value of electricity resources, including energy, flexibility, capacity, and environmental attributes. These reforms will also support the initial formation of a nationally unified energy market system centered on electricity and coordinated across multiple energy sources.
Since 2023, RMI has tracked China’s power market reform through its annual China Power Market Outlook report series. The series reviews policy and market progress, identifies emerging trends, and provides market participants and other stakeholders with insights into China’s evolving power market.
The 2026 edition systematically reviews major developments in China’s power market and pricing system since the beginning of 2025 and provides a near-term outlook for market participants. Given the rapid pace of policy and market change over the past year, as well as space limitations, this report focuses on areas that have seen significant progress or structural change, without repeating analysis already covered in previous editions.
Major trends are summarized in the table below. Readers may refer to the 2025, 2024, and 2023 editions for additional background and analysis on market and pricing developments. This English edition is tailored for international readers; a more detailed Chinese edition is also available.
Ten key trends for power market players
| By market or pricing mechanism | Spot market | 1. Provincial power spot markets now cover nearly all provinces, with spot prices emerging as the pricing anchor for medium- to long-term power and retail markets. | |
| M2L market | 2. Time-segmented medium-to-long-term trading has become widespread, with intraday price differentials constrained by trading price limits in some regions. | ||
| Retail market | 3. Wholesale-retail price pass-through strengthens, and retail-side use of market-based time-of-use electricity pricing accelerates. | ||
| Mechanism pricing | 4. Mechanism pricing has been implemented nationwide, with notable disparities emerging in regional implementation plans, bidding outcomes, and settlement expenses across regions. | ||
| Capacity pricing | 5. The capacity pricing mechanism is expanding to include more types of generation-side entities, with the compensation depending on peak-serving capability. | ||
| T&D tariffs and system operation fee | 6. Capacity-based transmission and distribution tariffs represent a significant policy development, while system operation fees play a growing role in the overall electricity price structure. | ||
| By market entity | Energy storage | 7. Stand-alone energy storage economics improve as capacity pricing rolls out, while market-based time-of-use pricing reshapes industrial and commercial storage operations. | |
| Virtual power plants | 8. Generation-type virtual power plants are becoming a key route for distributed renewables to enter power markets. | ||
| Green power trading | 9. Green power supply-demand balance remains relatively loose, while application scenarios are expanding, driving demand for green energy certificates. | ||
| Electric vehicles | 10. Vehicle-to-grid pilots continue to expand, and provinces are beginning to introduce discharge pricing mechanisms. | ||
Authors
Zihao Chen
Associate
Shuo Gao
Manager
Yi Jiang
Senior Associate
Ting Li
Chief Representative and Managing Director of RMI China
Yujing Liu
Principal
Ziyi Liu
Senior Associate
Jialin Tian
Associate
Liyue Zhang
Senior AssociateRelated Insights
Accelerating China’s Green Transition Through Zero-Carbon Industrial Parks
Demand-Side Drivers of Steel Decarbonization: Automotive Procurement Practices
Help build the clean energy future. Donate today.
Independent research. Real-world solutions. Supported by donors.
RMI can pursue the highest-impact climate and energy solutions because we’re supported by people who believe change is possible. Every gift helps advance the work needed to make clean energy the default choice worldwide.
For other ways to give to RMI, including checks or gifts of stock, please visit Other Ways to Give.
