The Benefits of the State no Longer Fully Procuring Electricity

The "Regulations on Full Coverage Guarantee Purchase of Renewable Energy Electricity" were released by the National Development and Reform Commission of China on March 18th, with an effective date set for April 1st, 2024. The significant change lies in the shift from mandatory full purchase of renewable energy-generated electricity by power grid enterprises to a combination of guarantee purchase and market-oriented operation.

China energy policy

These renewable energy sources comprise wind energy and solar energy. Although it seems that the state has withdrawn its support for the entire industry, a market-oriented approach will ultimately benefit all parties involved.

For the country, no longer purchasing renewable energy generation in full can alleviate the financial burden. The government will no longer need to provide subsidies or pricing guarantees for each unit of renewable energy generation, which will reduce pressure on public finances and facilitate better allocation of fiscal resources.

China renewable energy sources

For the industry, the adoption of market-oriented operation can incentivize increased private investment in the renewable energy sector, and it also will encourage market competition and promote the development of the energy market. This may encourage renewable energy producers to improve efficiency, reduce costs, and make technological innovations, thus making the entire industry more competitive and healthy.

Renewable Energy Electricity

So this policy will contribute to the development of the energy market and promote healthy competition in the industry. It will also alleviate the government's financial burden, improve energy resource utilization efficiency, and stimulate innovation and development in renewable energy technologies.

Post time: Apr-12-2024