Recently, the National Development and Reform Commission and the National Energy Administration jointly issued a notice titled “Deepening the Market-oriented Reform of New Energy Grid-connected Power Prices to Promote High-quality Development of New Energy” (Document No. 136 of 2025). This initiative aims to advance the market-oriented reform of new energy power prices, ensuring that all electricity generated from wind and solar sources enters the electricity market, with prices determined through market transactions. Additionally, a pricing settlement mechanism to support the sustainable development of new energy will be established, differentiating policies for existing and new projects. This policy has garnered widespread attention within the industry.
Full Market Entry as an Inevitable Trend for Industry Development
Statistics show that by the end of 2024, China’s installed capacity for new energy generation is expected to reach 1.45 billion kilowatts. Among this, the cumulative installed capacity of distributed photovoltaic (PV) generation is anticipated to hit 370 million kilowatts. As the installed capacity continues to grow, there is a consensus within the industry to expedite the sustainable development of distributed PV through market-driven transactions.
The “National Unified Power Market Development Plan Blue Book” released in 2024 outlines a clear “roadmap” and “timeline” for the development of the power market. By 2025, a preliminary national unified power market is expected to be established, with full completion by 2029 and further enhancement by 2035. It also sets a target for new energy market absorption to exceed 50% before 2025 and for new energy to fully participate in the market by 2029. The issuance of the latest notice is a critical step towards achieving the goal of a “preliminary national unified power market.”
From the perspective of policy formulation, full market entry does not restrict the development of household PV but is a necessary means to promote high-quality industry development. Market mechanisms can better guide the coordinated development of new energy with adjustable power sources and the grid, assisting in the establishment of a new power system. Furthermore, it helps address the challenges faced by household PV in grid connectivity and absorption. This marks a shift in the management of household PV in China from extensive expansion to refined operations, transitioning revenue security from reliance on single policy support to systematic optimization.
Mechanism Pricing as a “Stabilizer” for Market Transactions
For household PV enterprises, the major challenge of full market entry lies in the fluctuations of market electricity prices. To tackle this challenge, the notice introduces a sustainable price mechanism that ensures reasonable revenue for new energy by drawing on international experiences. For the electricity included in this mechanism, if the market transaction price falls below the mechanism price, a price difference compensation will be provided; conversely, if it exceeds the mechanism price, the difference will be deducted. This “payback and subsidy” pricing settlement method helps maintain the revenue of new energy generation projects at a reasonable level, stabilizing the expectations of enterprises and investors.
Countries like the UK have successfully implemented similar price difference contract mechanisms. The Low Carbon Contracts Company (LCCC) in the UK signs long-term contracts with renewable energy generators to determine performance prices. If the market price is lower than the contract price, a specified fund compensates the difference; if higher, the generator returns the excess to the fund. Since its implementation in 2017, this mechanism has shown significant results. The recent policy in China adopts this successful experience, indicating that while promoting household PV participation in the market, it also provides revenue assurance.
Leading Enterprises Actively Respond to Market Challenges
The market-oriented pricing mechanism will shift the core competition in the industry from “resource competition” to “capability competition.” Enterprises with advanced technology, strong management, and effective cost control will capture more market share and profits, leading the industry toward structural adjustments.
Leading companies have begun to actively position themselves. Lu Kai, President of Chint Aneng, stated, “In the long run, promoting household PV to participate in market transactions is an inevitable test on the path to making household PV a major energy source.” Reports indicate that the company has proactively begun its strategy, focusing on non-natural person household businesses and assisting agents in transforming their business philosophies. They are also exploring innovative models such as high-end villa sales, smart microgrids, virtual power plants, and integrated source-grid-load-storage solutions to create new business growth. Furthermore, they are enhancing operation and maintenance (O&M) services, utilizing smart algorithms to improve efficiency and asset management, thereby lowering the unit cost of electricity generation to boost competitiveness in market bidding.
Additionally, Chint Aneng is actively engaging in green certificate and green electricity trading, as well as electricity sales, to develop integrated end-to-end electricity trading capabilities, while facilitating green electricity trading efforts in regions such as Guangdong, Zhejiang, and Jiangsu.
Bright Future for the Household PV Market
With the implementation of the Energy Law on January 1, 2025, legal support for promoting a green and low-carbon transition has been established. Reflecting on the past, the household PV sector has experienced several painful adjustments due to policy changes. After the introduction of the “531” policy in 2018, the industry faced a brief adjustment period but quickly rebounded, with newly installed capacity soaring from 4.18 GW in 2019 to 43.48 GW in 2023. By the end of 2024, the cumulative installed capacity of household PV is expected to reach 145.15 GW.
The continuous growth of demand offers vast development space for household PV. According to the National Energy Administration, China’s total electricity consumption in 2024 is projected to reach 9.85 trillion kilowatt-hours, marking a year-on-year increase of 6.8%. The “China Power Industry Annual Development Report 2024” anticipates that total electricity consumption will exceed 13 trillion kilowatt-hours by 2030, indicating an average annual growth trend of 4%-6% from 2025 to 2030. Public data reveals that the domestic household PV market possesses over 1,600 GW of potential capacity, with more than 80 million rooftops suitable for household PV installation and a current penetration rate of only about 10%. Thus, the market holds immense development potential.
A relevant official from the National Energy Administration mentioned at a seminar reviewing the development of the PV industry in 2024 and looking ahead to 2025 that the greatest characteristic of the PV industry is its “rapid changes,” and its strongest capability is to “adapt to various changes.” In light of the new challenges brought by full market entry, the entire industry must maintain confidence, remain steadfast, enhance internal capabilities, and strive to navigate through the industry cycle, promoting greater scale, higher proportions, and improved quality in the PV sector, thereby contributing to achieving carbon peak and carbon neutrality goals on schedule.
