China Takes Steps to Revise Renewable Energy Pricing System for Grid Connection

On February 9, the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) jointly issued the Notice on Deepening the Market-Based Pricing Reform for Renewable Energy Grid Connection and Promoting High-Quality Development in Renewable Energy (NDRC Price [2025] No. 136).

By the end of 2024, China’s renewable energy generation capacity is expected to reach approximately 1.41 billion kW, accounting for more than 40% of the country’s total electricity generation capacity—surpassing coal power capacity. However, as renewable energy continues to grow, the existing fixed pricing system for grid connection has failed to adequately reflect market supply and demand. Additionally, it has not fairly allocated the responsibilities for regulating the electricity system, leading to increasing challenges. These issues highlight the urgent need for deeper market-based pricing reforms to better utilize market mechanisms and promote the high-quality development of the renewable energy industry.

The NDRC and NEA officials explained that the reform will focus on three key areas:

Transitioning to market-driven pricing: Renewable energy projects will, in principle, have their electricity sales entered into the electricity market, with the grid connection price determined through market transactions.

Establishing a sustainable pricing mechanism: Once renewable energy enters the market, a sustainable pricing system will be implemented, where electricity included in the system will be settled at the agreed-upon price.

Differentiating policies for existing and new projects: For existing projects, the mechanism’s pricing will align with current policies, while new projects will see prices determined through market-based bidding.

As for end users, the reform will not affect residential or agricultural electricity prices, which will continue under the current rate structure. For industrial and commercial users, estimates suggest that, in the first year, electricity prices will remain broadly in line with the previous year. In areas with a loose power supply and lower renewable energy prices, slight decreases may occur. Going forward, electricity prices for industrial and commercial users will fluctuate based on supply-demand conditions and renewable energy development.