2022-10-25-RMI-中国电力市场和定价机制改革_迈向零碳电力增长和新电力系统的重要一步（英）_46页_1mb

Power Market and Pricing Mechanism Reform in China: A Vital Step Toward Zero-Carbon Electricity Growth

The report analyzes China's power market reforms under the "dual-carbon" goals (carbon peak by 2030, neutrality by 2060). It identifies three key challenges: promoting sustainable zero-carbon capacity expansion, maximizing zero-carbon electricity consumption, and ensuring system adequacy as the power sector transitions toward a "new power system."

Core Recommendations

1. Multiyear Contracts for Capacity Expansion: Auction-based multiyear contracts (5–25 years) should replace subsidies to stabilize revenue for renewable projects. Auction mechanisms, like those tested in China's pilot programs, are preferable to competitive allocation for efficiency and lower implementation costs.

2. Optimizing Interprovincial Trading: Eliminate transmission tariffs and dead-band issues through regional pricing mechanisms (e.g., congestion rent or reciprocity models). European practices, such as the Single Day-ahead Coupling market, can inform policy changes to reduce barriers to green power flow.

3. Capacity Pricing for System Adequacy: Adopt capacity payments (rather than scarcity pricing) to support grid reliability. China should prioritize provincial-level capacity mechanisms due to its fragmented market structure and rapid load growth. Long-term, a unified regional system could align with the national unified power market target.

Key Context

• Renewable Integration Challenges: Post-subsidy, developers face revenue volatility. Energy storage requirements and market-based tender processes in Europe and Asia are addressed through contract mechanisms.
• Transmission Barriers: Current "postage stamp" tariffs create disincentives for interprovincial flow. Modern mechanisms could increase line utilization and renewable consumption.
• Market Maturity: Approaches prioritizing simplicity (e.g., auctions, transmission optimization) are recommended for the near term (before 2025), transitioning to integrated market models after 2030.

Global Practice Insights

• Scarcity pricing mechanisms, used in Texas and Australia, are unsuitable for China due to market immaturity and rapid growth.
• Contract for Difference (CfD) schemes (UK) and virtual PPAs (corporate markets) enhance renewable predictability.

Conclusion

Power market reform in China must prioritize market-based instruments aligned with its unique conditions, leveraging multiyear contracts and capacity mechanisms to support zero-carbon growth and system reliability while navigating interprovincial coordination and transmission infrastructure gaps.