China’s power market reforms have been evolving for 20 years. The core aim of the reforms has been to introduce more competition along the power sector value chain to diversify investments and optimize the overall operation. Beginning in 2002, power generation was separated from grid utilities who oversaw transmission, distribution, and retail. In 2015, the “current round of reforms” was introduced to bring competition to the electricity energy market and the distribution and retail market. However, unique challenges add complexity in communicating China’s power system and market reforms to an international audience:

• China-specific rules that deviate from international common practices.
• China’s policies vary across different municipal levels and are at various stages of implementation.
• Cultural and contextual nuances that are difficult to convey accurately in translation.

RMI aims to build a solid bridge between international audiences and China’s power system and market progress. RMI has been consistently helping our audience accurately understand the details and impacts of the China power system and market reforms, to provide insights on pacing up the energy transition.

Since China’s 2020 announcement of achieving carbon peaking by 2030 and carbon neutrality by 2060, China has accelerated its power system transition and market reforms. The latest power sector top-level design hopes to build a national unified power market that promotes a much higher penetration of renewables without compromising supply security and reliability. The coming years are a crucial time for China to achieve these goals.

Beginning this year, we will start an annual series to provide insights on the ongoing and emerging trends in China’s power market reforms. This report analyzes the power market’s components, including the electricity energy market, ancillary services market, capacity market, and transmission and distribution pricing. We will examine recent market developments and provide an outlook on power marketization in the next one to three years.