The Qinghai Provincial Development and Reform Commission has issued a draft notice regarding the establishment of a generation-side capacity pricing mechanism for the province. The public consultation period for this draft is set from February 25, 2026, to March 5, 2026.
The mechanism's scope includes all compliant, operational public coal-fired power generation, gas-fired power generation, solar thermal power generation that is not included in the sustainable development price settlement mechanism and does not receive new energy subsidies, and independent grid-side new energy storage power stations that serve the safe operation of the power system and do not participate in configured storage.
A key component is the provincial capacity supply-demand coefficient, calculated as the ratio of total system capacity requirement to total system reliable capacity. The total system capacity requirement is defined as the capacity during the period of peak net system load, specifically: provincial load + outbound transmission capacity requirement + reserve capacity - interruptible load capacity. The total system reliable capacity is the sum of the reliable capacities of various generating units and the reliable capacity of inbound transmission channels. Based on statistical calculations from 2023-2025, which showed a total system capacity requirement of 22,102.96 MW and a total system reliable capacity of 21,167.93 MW, the capacity supply-demand coefficient for 2026 is set at 1.04.
For solar thermal and new energy storage, the effective capacity is determined by the formula: Maximum discharge power × (1 - auxiliary power rate) × reliable capacity coefficient. The reliable capacity coefficient is the minimum value of either the ratio of full-power discharge duration to the duration of the peak net system load period, or 100%. For 2026, the auxiliary power rate for solar thermal power is temporarily set at 21.53%, and for new energy storage at 10.39%. The peak net load period is defined as the maximum continuous duration of the peak net load from the top 0.2% of peak load hours over the past three years, calculated as 4 hours.
A unified capacity compensation standard will be applied to all power sources. Initially, for 2026, this standard is set at 165 yuan per kilowatt per year, referencing a previous national notice on coal power capacity compensation. Subsequently, the compensation standard will be calculated based on recovering all or a portion of the fixed costs of marginal units and will be adjusted by provincial pricing authorities according to market conditions and construction costs.
Capacity fees will be calculated monthly based on the product of a unit's declared capacity, the capacity supply-demand coefficient, and the compensation standard. These fees will be allocated proportionally based on monthly outbound electricity transmission and the electricity consumption of all provincial commercial and industrial users. Penalties will apply for unplanned outages; for instance, thermal power units experiencing one unplanned outage in a month will have their capacity fee for that month reduced.
The notice emphasizes policy coordination, cost monitoring, project list management, market supervision, and effective implementation. The new mechanism is scheduled to take effect from a specified date in 2026, superseding any conflicting existing policies.
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