Energy storage pricing mechanism reform accelerates

Should energy storage technologies be included in the capacity pricing system?

Beyond generation technologies, energy storage technologies that provide capacity services should also be included in the capacity pricing system. In China, both power system operation and economic activity are based on the provincial level.

How has China accelerated power system transition and market reform?

Since China’s announcement of achieving carbon peaking by 2030 and carbon neutrality by 2060 (also known as the dual-carbon target), it has accelerated power system transition and market reform by introducing the New Power System and the national unified power market system on the policy level.

Can a pricing mechanism solve a zero-carbon power system adequacy problem?

Establishing a pricing mechanism that reflects true capacity value will be the solution to the system adequacy challenge in the zero-carbon electricity growth scenario over the next decade. Using pricing mechanism to replace direct administrative measures also aligns with the direction of power system reform.

Will the 'one mechanism fits all' pricing model fit in the new system?

On the way toward the New Power System, the power industry’s conventional “one mechanism fits all” pricing model will not fit in the new system due to the varying abilities and functions of diferent types of power generators.

Does China's power market need a scarcity pricing mechanism?

China’s power market is still in its early stage, with the M2L market being the main component. The spot market is still far from mature operation. As the scarcity pricing mechanism is entirely based on spot market signals, China’s current power market does not have the basis for applying scarcity pricing in the next decade.

How will the market clearing price affect renewable investment?

With the massive penetration of renewables, the short-term fluctuation of the market clearing price under merit-order dispatch, especially the downward risk of the clearing price, will have a negative impact on renewable investment and restrict the sustainable development of renewable installation.