China’s National Energy Administration (NEA) has introduced a new set of measures to support peer-to-peer energy trading. The new initiatives are expected to remove barriers to further development of distributed PV projects.
China’s NEA has issued a new policy to support peer-to-peer electricity sales and energy flexibility services.
The new ‘Guidelines for supporting the innovative development of new business entities in the energy sector’, published on December. 5, define two categories of new energy market players: technology-specific entities and resource pooling entities.
Technology-specific entities include operators of distributed energy resources such as solar energy, decentralized wind energy and energy storage stations. Resource aggregation entities include operators of virtual power plants and intelligent microgrids that coherently manage various energy sources.
Under the new guidelines, qualified newcomers may be exempt from obtaining conventional electricity utility licenses, lowering barriers to entry and unlocking opportunities for innovation in electricity services. For example, the policy allows the sale of electricity over the fence, allowing companies to sell power from distributed solar energy systems to customers outside their immediate area, but within the same distribution grid zone.
The guidelines also promote local consumption of renewable energy by enabling direct connections between renewable energy producers and consumers. This could reduce reliance on centralized grid infrastructure, addressing one of the last hurdles to distributed solar adoption.
To ensure system reliability, the policy outlines four operational requirements for new market entrants: they must be observable, measurable, adaptable and controllable. It also encourages virtual power plants to pool distributed resources and provide essential network services such as demand response and frequency regulation.
The NEA said the new policy will promote innovation and ensure fair cost sharing. New entrants must bear the costs of imbalance settlement, deviation penalties, infrastructure use fees and applicable government charges.
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 suit the specific business models and trading activities of these new players, ensuring financial security in transactions, the NEA said.
Analysts in China have said the policy will remove remaining barriers to distributed PV projects, potentially unlocking substantial market potential for this segment. By enabling innovative business models such as over-the-fence electricity trading and pooling of decentralized resources, the guidelines are expected to accelerate China’s energy market reforms and the integration of renewable energy into the power grid.
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