China’s Power Market Trading Volume Surges 25.6%

China’s electricity market trading volume reached 24,307 billion kWh (2.43 trillion kWh) in the first four months of 2026, a year-on-year increase of 25.6%, according to data released by the National Energy Administration (NEA) on May 28. The surge reflects the accelerating progress of China’s power market reform, the full entry of renewable energy into the electricity market, and growing demand driven by economic activity, as reported by People’s Daily.

In April alone, the market trading volume reached 5,883 billion kWh (588.3 billion kWh), up 25.5% year-on-year, according to the NEA data published in both the domestic edition of People’s Daily (May 31) and the People’s Daily Overseas Edition (May 29).

Market Structure and Key Drivers

The growth was broad-based across trading scopes and types. Intra-provincial trading — electricity bought and sold within individual provinces — reached 19,456 billion kWh in the January-to-April period, up 29.4% year-on-year. Cross-provincial and cross-regional trading totaled 4,851 billion kWh, rising 12.2% over the same period last year.

By trading type, medium-to-long-term contracts — which provide price stability and supply security — accounted for the bulk of volume at 21,180 billion kWh. Spot trading, where electricity is bought and sold for immediate delivery, reached 3,128 billion kWh. Green electricity trading, a rapidly growing segment that allows consumers to purchase renewable energy directly, totaled 1,053 billion kWh, up 3.2% year-on-year.

Policy Backdrop: The National Unified Electricity Market

The surge in trading volume comes against the backdrop of a major policy push. On February 8, 2026, the State Council issued Guobanfa [2026] No. 4, titled “Opinions on Improving the National Unified Electricity Market System,” which set ambitious targets for market completion by 2030 and 2035.

Under the framework, China aims to have a basically complete national unified electricity market by 2030, with all power sources and non-subsidized users directly participating in the market, and market-based trading accounting for approximately 70% of total social electricity consumption. By 2035, the system is expected to be fully operational, with cross-provincial and intra-provincial trading organically integrated.

New Energy Fully Enters the Market

A transformative development highlighted by the NEA is that all new energy (renewable) sources have now entered the electricity market. An NEA official told People’s Daily Overseas Edition that this full market entry is a key driver behind the significant year-on-year growth in trading volume.

This milestone follows the June 1, 2025 requirement that all new renewable energy projects must enter the market for trading, with prices determined by market forces. In 2024, over 50% of new energy generation was already consumed through market-based mechanisms, and the utilization rate remained above 95% despite rapid capacity growth. Green certificate and green electricity trading reached 446 billion kWh in 2024, up 364% year-on-year.

Cross-Provincial Integration Accelerates

The NEA also highlighted significant progress in breaking down regional barriers. Cross-provincial and cross-regional medium-to-long-term and spot trading now operates continuously. Trading across the two major grid operational areas — State Grid Corporation of China and China Southern Power Grid — has become normalized. Regional inter-provincial mutual-aid trading has been launched in the Yangtze River Delta, Northeast China, and other regions, further expanding the scale of cross-provincial transactions.

However, cross-provincial trading growth (12.2%) continues to lag behind intra-provincial growth (29.4%), suggesting that dismantling regional barriers remains a work in progress.

Implications and Outlook

The 25.6% growth rate in market trading volume significantly outpaces overall electricity demand growth, indicating that an increasing share of China’s electricity is being transacted through market mechanisms rather than through planned allocation. This reflects the deepening of China’s power sector reform, which began in earnest in 2015 and has steadily shifted the country from a “planned electricity” system to a “market electricity” model.

China’s electricity prices remain among the lowest globally. Residential and commercial average electricity prices rank 44th out of 50 major economies, at 32% and 39% of the global average, respectively.

Looking ahead, green electricity trading — while growing — still represents only 4.3% of cumulative trading volume, indicating significant room for expansion. The continued integration of renewable energy into market mechanisms, combined with the State Council’s clear policy roadmap, positions China’s power market for sustained transformation over the next decade.

Key questions remain: How will full market pricing affect electricity costs for industrial and residential consumers? Can cross-provincial trading barriers be fully eliminated by 2030 given regional economic disparities? And how will the capacity market mechanism interact with the rapid expansion of renewable energy? These issues will shape the next phase of China’s electricity market evolution.