China’s NEA has issued a new policy to support peer-to-peer electricity sales and energy flexibility services.
The new “Guidelines on Supporting the Innovative Development of New Business Entities in the Power Sector,” published on Dece. 5, define two categories of new power market players: technology-specific entities and resource aggregation entities.
Technology-specific entities include operators of distributed energy sources such as solar PV, decentralized wind power, and energy storage stations. Resource aggregation entities include operators of virtual power plants and intelligent microgrids that cohesively manage diverse energy assets.
Under the new guidelines, qualified entrants may be exempt from obtaining conventional electricity business licenses, lowering entry barriers and unlocking opportunities for innovation in electricity services. For example, the policy allows “over-the-fence” electricity sales, enabling companies to sell power from distributed solar systems to customers outside their immediate premises but within the same distribution grid zone.
The guidelines also promote local renewable energy consumption by enabling direct connections between renewable generators and consumers. This could reduce reliance on centralized grid infrastructure, addressing one of the final hurdles for distributed solar power adoption.
To ensure system reliability, the policy outlines four operational requirements for new market players: they must be observable, measurable, adjustable, and controllable. It also encourages virtual power plants to aggregate distributed resources and provide essential grid services such as demand response and frequency regulation.
The NEA said the new policies will foster innovation and ensure fairness in cost-sharing. New market participants must shoulder costs for imbalance settlements, deviation penalties, infrastructure usage fees, and applicable government levies.
The guidelines also streamline registration, trading, and settlement processes. Regional electricity trading agencies will establish registration categories and simplify application procedures for new entities. Settlement mechanisms will align with the specific business models and trading activities of these new players, ensuring financial security in transactions, according to the NEA.
Analysts in China have said that the policy will remove remaining barriers for distributed PV projects, potentially unlocking substantial market potential for this segment. By enabling innovative business models such as “over-the-fence” electricity trading and aggregating decentralized resources, the guidelines are expected to accelerate China’s energy market reforms and the integration of renewable energy into the grid.
