As part of the ongoing effort to establish a unified national electricity spot market, in December, China’s National Energy Administration (NEA) issued two draft policy documents, “Electricity Spot Market Basic Rules” and “Measures for the Supervision of the Electricity Spot Markets”. These policies propose standardized national spot market rules and market monitoring procedures.  This standardization has the potential to provide common ground upon which provinces implement their version of spot market rules. More broadly, the spot market effort has the potential to help support integration of renewable energy.

Sharing the ongoing development of electricity markets challenges and opportunities worldwide, authors Max Dupuy and Chi Gao provided comments to NEA on the two documents, suggesting four practical improvements:

  • Further specifying the detailed implementation of market monitoring and cost survey procedures to prevent market abuse.
  • Canceling price ceiling and floor in spot markets to allow better price signals to support system flexibility.
  • Cautioning against capacity payments, which could exacerbate overbuilding of coal-fired generation capacity.
  • Dissolving interprovincial barriers to renewable integration and encouraging the establishment of truly unified multi-province dispatch regions.

The paper is Chinese only.