China officially established the guideline on medium- and long-term electricity trading based a 2016 temporary version, to ensure the market can develop healthily free from too much government intervention.
The revised version, jointly issued by the National Development and Reform Commission, National Energy Administration, made it clear that the price of medium- and long-term power transactions should be made by market players through bilateral consultations, biddings, and other market-oriented trading forms, and third parties must not interfere.
In principle, there should be no ceilings in bilateral negotiated transactions, barring where the government clearly stipulates.
As for biddings, in order to avoid market manipulation and vicious competition, upper and lower limits can be set on offers or clearing prices. In principle, the limits are supposed to be proposed by relevant management committees and approved by agencies of National Energy Administration and relevant local governmental departments. Improper government intervention should be avoided.
The revised guideline enriched the content in aspects of market entry and exit, trading organization, price mechanism, security inspection, market supervision, and risk management, improving the flexibility and liquidity of trading and strengthening the role of medium- and long-term electricity trading in stabilizing returns and averting risks.
Data from China Electricity Council showed China's the volume of medium- and long-term electricity trading totaled 2,177.14 TWh, accounting for 30% of total power consumption, and 36.8% of power grid sales.
(Writing by Alex Guo Editing by Tammy Yang)
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