Log in to the Sina Finance APP and search for [Information Disclosure] to view more evaluation ratings. (Source: China Electric Power News) Reprinted from: China Electric Power News – Several Insights on the New Edition of the "Basic Rules for the Medium- and Long-Term Electricity Market". The Fourth Plenary Session of the 20th Central Committee made important arrangements for building a strong domestic market, demanding the resolute removal of obstacles and blockages hindering the construction of a unified national market. As a crucial component of this, the national unified electricity market must pioneer trials and play an exemplary leading role. Recently, the "Basic Rules for the Medium- and Long-Term Electricity Market" (hereinafter referred to as the "Basic Rules") were officially issued. This revised document, refined through five years of practical experience, not only continues the mature practices of past market development but also introduces multiple institutional innovations to meet the needs of constructing a new power system, thereby laying a solid institutional foundation for the national unified electricity market and marking the entry of China's medium- and long-term electricity market into a new phase of deepening construction and improving quality and efficiency.
For years, the foundational rules for medium- and long-term electricity trading have been the earliest established and longest-operating market rules in China. The National Development and Reform Commission and the National Energy Administration successively issued two versions of the basic rules in 2016 and 2020, laying a solid foundation for the healthy development and standardized operation of China's medium- and long-term electricity market. Since the "14th Five-Year Plan" period, China's national unified electricity market, based on the medium- and long-term market, has gradually improved, with a preliminary pattern of diverse competitive entities emerging. The number of market entities in the State Grid's operating area surged dramatically from 198,000 to 800,000, incentivizing new entities like virtual power plants to participate in the market, with over 14,000 registered. Trading scale has continuously expanded, with market transaction volume growing from 2.3 trillion kWh to 5.4 trillion kWh, with medium- and long-term transactions accounting for 90%. The level of market-based integration of new energy has steadily increased, with the proportion of market-based electricity rising from 21% to 63%, cumulative green electricity transactions exceeding 430 billion kWh, and innovative multi-year green power agreements (PPAs) facilitating cumulative transaction volumes of 60 billion kWh. After a decade of development, China, drawing on international experience while closely integrating its national and grid conditions, has pragmatically advanced and boldly innovated based on the practical needs of energy supply security and transformation and the stage of market development. This has led to the initial formation of a medium- and long-term electricity market trading system that meets market needs and possesses Chinese characteristics, playing a pivotal connecting role in the process of electricity marketization reform. Firstly, it effectively accommodates the liberalization of power generation and consumption plans. It ensures the comprehensive, batch-by-batch participation of coal-fired and new energy generation on the supply side in the market, achieves "full liberalization where possible" on the user side, and gradually transforms electricity plans into market-based medium- and long-term contracts or government-authorized contracts, enabling a smooth transition from planning to markets. Secondly, market refinement and continuity have significantly improved. Building on the foundation of centralized trading in the medium- and long-term market, time-of-use trading and time-stamped energy block products have been promoted, dividing the 24-hour day into independent trading periods to achieve refined pricing of electricity value and seamless connection with the spot market. Thirdly, a dual function balancing system service and risk management has been established. It guides trading entities to effectively manage costs and revenues through medium- and long-term transactions based on their actual generation and consumption needs, thereby stabilizing the operational order and price expectations for the entire grid's power production and management; simultaneously, through short-cycle flexible trading, it provides necessary means for entities to flexibly adjust forecast deviations and manage balance. Fourthly, it adapts to the trading demands under the rapid development of new energy. It continuously refines the green power trading process, optimizes multi-year green power trading mechanisms (PPAs), meets the green electricity usage demands of the consumption side to serve low-carbon transformation, and promotes the realization of environmental rights for the generation side while stabilizing project revenue expectations.
In recent years, with the accelerated implementation of the "dual carbon" goals and the construction of a new power system, the policy boundaries and foundational conditions for electricity market construction and operation have undergone significant changes. Stakeholders have raised higher demands for the unified coordination, flexibility, efficiency, openness, inclusiveness, standardized operation of China's medium- and long-term electricity market, and its linkage with other trading varieties. The revision of the "Basic Rules" is both grounded in the present, continuously improving market mechanisms such as continuous operation of the medium- and long-term market and promoting time-of-use trading and settlement, and future-oriented, proactively responding to new situations and challenges in deepening the construction of the medium- and long-term electricity market. It aims to perfect the continuous operation mechanism from long to short terms, optimize resource allocation, standardize standards across various business segments, and enhance market quality and efficiency, mainly reflected in the following aspects. Firstly, it clarifies functional positioning and promotes the coordinated operation of basic rules and systems. The "Basic Rules" further define the functional positioning of the medium- and long-term market within the national unified electricity market, emphasizing its fundamental role in balancing long-term electricity supply and demand and stabilizing market operation. By optimizing grid security constraint information and adding requirements for transaction bidding and clearing constraints, it reflects the function of medium- and long-term transactions in serving system operational balance from the long-term to the near-term. The design emphasizes systematicness and coordination, effectively accommodating policy requirements such as the liberalization of generation and consumption plans, grid proxy purchasing, and time-of-use pricing for users, thereby strengthening the overall connection with the "1+6" foundational rule system of the electricity market. The chapter arrangement has been optimized and adjusted to avoid content repetition and functional overlap, and the dedicated chapter on green power trading has been integrated into relevant sections, supporting the widespread participation of new energy in green power trading and promoting the integration of green power trading with conventional energy trading, significantly enhancing the readability and practicality of the rules. Secondly, it summarizes typical experiences and leverages the basic rules' role in unifying standards. The "Basic Rules" fully summarize the typical operational experiences of inter-provincial and provincial medium- and long-term markets in recent years, refining them into standard mechanisms, and emphasize the bidirectional extension of trading organization towards "longer" and "shorter" terms. On one hand, it promotes the multi-year power purchase agreement mechanism, exploring the regular opening of multi-year green power trading markets to stabilize market supply, demand, and prices. On the other hand, it requires daily continuous opening for intra-month trading, explores continuous opening for multi-year, annual, and monthly trading, and proposes that inter-provincial intra-month trading should not be restricted by transmission corridor direction or type, significantly enhancing trading flexibility to serve power supply security and new energy integration. Furthermore, it further optimizes the time-of-use pricing mechanism. For market entities directly participating in trading, it no longer artificially stipulates time-of-use price levels and periods, strengthening the role of genuine price signals. It also requires gradually aligning the price limits for short-term medium- and long-term intra-month transactions with those of spot market transactions, promoting the gradual convergence of prices between the two markets. Thirdly, it standardizes market operation to ensure orderly and efficient organization of electricity trading. Based on the practical experience of electricity market regulation in recent years, the "Basic Rules" comprehensively standardize key business segments such as entity registration, trading organization, platform construction, and risk prevention and control. Regarding entity registration, it requires all electricity volumes of power users to participate in either the wholesale or retail market, allowing grid proxy purchasing users to choose to enter the market monthly. In terms of trading organization, it unifies the trading sequence, mainly including multi-year, annual, monthly, and intra-month trades, requiring that time-of-use quantities and prices be formed through agreement or competition. It innovates with a trading calendar system and optimizes the content and release process of trading announcements for the convenience of entity choice. Regarding platform construction, it proposes unifying platform institutions, technical standards, core functions, and interaction specifications, laying a solid technical foundation for data interoperability in the national unified electricity market. For risk prevention and control, it details the types of electricity market risks, clarifies methods for risk prevention, control, and disposal, safeguarding the stable operation of the market. Fourthly, it adapts to future development, facilitating the accelerated construction of the new power system. With the emergence of numerous new market entities such as new energy storage, electric vehicles, and integrated source-grid-load-storage projects, the characteristics of bidirectional interaction within the system are becoming increasingly evident. The demand side will play a more important role in ensuring power supply and promoting the integration of clean energy. The "Basic Rules" provide a systematic design for the participation of these new entities in the market from aspects such as resource classification, entity rights and responsibilities, and trading and settlement methods. It guides various new entities to actively participate in system regulation through market price signals, alleviating local grid congestion and pressure from new energy integration. Simultaneously, the "Basic Rules" require that green power transactions ensure a one-to-one correspondence between power generation enterprises and electricity users, enabling the traceability of the environmental value of green electricity and providing market entities with a unique and credible certificate of green power consumption, thereby enhancing the credibility and attractiveness of green power trading.
Based on the new stage of development and balancing multiple objectives such as ensuring supply, promoting transformation, and stabilizing prices, the Beijing Electricity Trading Center will thoroughly implement the requirements of the "Basic Rules," continuously deepen the construction of the medium- and long-term market, standardize market operations, and strive to write a new chapter for the national unified electricity market. Firstly, it will implement the latest requirements of the "Basic Rules" and carry out revisions to the implementation rules for inter-provincial medium- and long-term trading. It will improve the cross-regional and inter-provincial annual medium- and long-term trading mechanism to stabilize long-term inter-provincial supply and demand; continuously optimize the monthly and intra-month short-term trading mechanisms, promoting the realization of inter-provincial full-channel centralized optimization and continuous rolling trading based on grid security constraints, thereby enhancing the flexibility of inter-provincial trading; and normalize cross-grid operating area transactions to promote the high-level free flow of electricity resources nationwide. Secondly, it will promote the standardization and unification of processes across all trading segments, laying the foundation for deepening the construction of the national unified electricity market. It will strengthen the coordinated operation of inter-provincial and intra-provincial markets, promoting the alignment and unification of interface standards in areas such as trading sequence, trading products, and market price limits. It will conduct research on typical designs for intra-provincial markets,健全 standards for key business processes such as market registration, trading organization, settlement, and information disclosure to ensure standardized market operation. It will improve the technical platform architecture and data interaction specifications, strengthening system interconnection and information flow, and solidifying the market's technical "foundation." Thirdly, it will strengthen the monitoring of electricity market operations and enhance the ability to respond to market risks. Led by digital supervision, it will continuously advance the monitoring and analysis of electricity market operations, research and propose electricity market risk plans, clarify the basic requirements for market risk prevention and control, improve risk classification and disposal processes, and refine relevant rule provisions. In accordance with the work requirements for consistency in the foundational rules and systems of the electricity market, and under the guidance of the National Energy Administration, it will clarify the rigidly binding content of the "Basic Rules." On this basis, it will actively explore new varieties and mechanisms, ensuring that innovation is measured and conducive to integration. (By Li Zhu, Deputy General Manager of Beijing Electricity Trading Center)
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