Ongoing power market reforms and improvements to green power procurement mechanisms have continued to boost China’s green power market. This rapid expansion has strengthened the foundation for corporations to leverage green power and Green Electricity Certificates (GECs) to meet both domestic and international compliance requirements. The report evaluates five green power procurement options within the context of China’s power market reforms and provides analysis of domestic and international application scenarios for green power and GECs.

Corporate green power procurement options:

• Green power trading: In 2024, trading volumes grew rapidly, accompanied by declines in energy prices and green premiums. Looking ahead, the large-scale participation of distributed projects in the market and the implementation of multi-year transactions are anticipated to gain momentum.
• Unbundled GECs: In August 2023, GEC’s role as the exclusive embodiment of the environmental value of green power was formally established. The development of the GEC scheme expanded domestic application scenarios and increased corporate willingness to purchase GECs. With the surge of GEC supply, prices are expected to remain low in the short to medium term, extending the trend observed since 2024.
• Direct investment in utility-scale renewable projects: The time-of-use pricing mechanism and the expansion of renewable market transactions are reshaping revenue models for direct investments in utility-scale projects. Meanwhile, additional investment requirements for supporting local industries persist, likely driving up nontechnical costs for corporations.
• On-site distributed renewable projects: Distributed solar PV has sustained rapid growth, exposing the limitations of distributed grid capacity and leading solar PV investors to adopt a more cautious approach. The ownership of environmental attributes has emerged as a critical concern for both existing and future projects.
• Over the-fence renewable trading: Over the past two years, over-the-fence renewable trading has made limited progress. As green power trading continues to expand to distributed projects, the urgency for developers and buyers to trade green power with this option is expected to gradually decline.

Application scenarios:

• Domestic scenarios: The application scenarios for green power procurement have evolved from meeting renewable portfolio standards to addressing energy consumption dual control assessments. As China transitions from energy dual control to carbon dual control, green power procurement is expected to further expand, shifting from energy use-focused applications to broader carbon emissions control scenarios.

• International scenarios: Voluntary application scenarios, represented by supply chain corporations, tend to embrace market-based approaches such as green power trading and GECs. Conversely, mandatory scenarios driven by trading rules exhibit a stronger preference for location-based approaches, such as electricity generated on site or through direct connections.