Trading will benefit green development and transition to low-carbon future

China's ambition to accelerate its national power market construction will play a key role in ensuring energy and power supply in the country while stepping up the rapid development of new energy, an analyst said.

China will step up efforts to accelerate work on creating a unified, efficient and well-governed national power market system, Xinhua News Agency cited President Xi Jinping as saying on Wednesday at a meeting of the Central Committee for Deepening Overall Reform.

The meeting calls for local power markets to further integrate and unify and come up with a diversified and competitive power market in the country, to effectively balance power demand and supply. It also encourages power market overall planning, and formulation of laws and regulations as well as scientific monitoring while steadily pushing forward a green transition of the national power market with an increasing proportion of clean energy.

"A unified national power market might lead to a better integration of the country's grid networks, while further facilitating renewable energy transmission over a longer distance and wider area of provinces," said Wei Hanyang, a power market analyst at research firm BloombergNEF. "However, the mechanism and workflow of integrating these existing markets remain unclear, and require more follow-up policies."

Wei said the attempt will play a positive role in the development of renewable energy in China.

"It provides a higher sales price when the electricity is more needed in peak hours or in energy-consuming provinces, while in the past that price was mostly fixed by agreement," he said. "It may also unleash the capacity potentials of transmission lines and make room for renewables integration, as the grid company is incentivized to use remaining capacity to deliver more and earn more transmission fees."

State Grid Corp of China, the largest power provider in the country, released a measure on power spot trading across provinces on Wednesday, a milestone in the country's spot power market construction.

The spot power market between provinces will further activate the vitality of major market players and achieve a better balance in the national power network while promoting better consumption of clean energy on a large scale, it said.

Essence Securities, a Chinese securities company, said the government's pushing forward of power market trading will benefit green power development in China while further facilitating the country's transition toward a low carbon future.