In 2024, the electricity traded in China's renewable energy market will exceed 60%

As of 2023, nearly half of the photovoltaic and wind power generation in the liberalized electricity market is traded, and it is expected that this proportion will reach one hundred percent by 2030. At present, in terms of installed capacity, photovoltaic and wind power, as the second and third largest power generation technologies in China, are the two major risk exposures in the electricity market. So owners of renewable energy projects in China need to carefully consider them.

Source: BloombergNEF

According to the estimation of Bloomberg New Energy Finance, by 2023, over 60% of China's electricity traded in the market will have been generated, thanks to the regulatory relief on electricity users in the manufacturing and service industries since 2015. Previously, China's power industry was operated by state-owned enterprises, and the electricity prices of power plant operators were determined by the government.

In China, it is difficult to obtain a guaranteed electricity price for more than one year. Compared to the benchmark price of coal, clean electricity trading can earn a premium, which benefits the non-subsidized renewable energy. In 2023, the ratio of green power to coal-fired power prices in China will be 98%, and the market trading revenue of renewable energy will depend on the type of market it enters and the local supply and demand situation.

The Chinese photovoltaic and wind power markets mostly sign bilateral contracts, while renewable energy bilateral contracts adopt a shape curve pricing model, setting the noon price at a deep valley level, which has a certain negative impact on photovoltaic revenue. Another type of contract for difference that may be promoted nationwide has a term of only one year.

The above article is excerpted from "BloombergNEF"

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