China’s First Transmission Rights Auction Marks Power Market Milestone
China has completed its first-ever transmission rights transaction, a landmark step in the country’s decades-long power market reform that shifts how cross-provincial electricity transmission capacity is allocated. The transaction, conducted on June 11-12 via the Yunxiao DC transmission channel connecting Fujian and Guangdong, saw 113 market entities bid for 21.16 GWh of transmission capacity, of which over 75% was green electricity, according to The Paper.
From Administrative Planning to Market Allocation
Transmission rights — the right to use a specific transmission channel within a given time frame, direction, and capacity — have traditionally been allocated through administrative planning in China. The Yunxiao DC channel, a ±100 kV HVDC line with 200 MW rated capacity commissioned in September 2022, operated under a fixed single-capacity pricing model: an annual charge of 230 million yuan split evenly between Fujian and Guangdong.
This “one-price-fits-all” approach had significant drawbacks. During peak hours, competition for the channel was intense, while off-peak surplus capacity went to waste. As Yicai reported, the new mechanism changes this by releasing remaining capacity to the market through competitive bidding.
“If we compare the transmission channel to a highway, then transmission rights are the ‘right of way’ on this highway,” said Zeng Zhiyong of Guangdong Power Grid’s Marketing Department, as quoted by China News Service. “In the past, who uses this ‘highway,’ how much, and how to charge — these were mainly determined by planned allocation. Now, we are putting the remaining ‘right of way’ up for market-based auction.”
Intense Bidding Reflects Scarcity Value
The first auction revealed strong market demand. Entities’ declared power reached 3.9 times the available capacity, and 5.8 times during evening peak hours. According to Chen Wei, Deputy General Manager of the Guangzhou Power Exchange Center, 12% of time slots reached the upper price limit of 100 yuan/MWh.
“The bidding for transmission rights was fierce, fully reflecting the scarcity value of transmission channel resources,” Chen Wei said, as reported by The Paper. Over 4,000 people proactively attended joint training sessions held by the Guangzhou and Beijing Power Exchange Centers ahead of the transaction.
Gan Yijun, Market Development and Trading Manager at CGN Power Sales Co., told China News Service: “We targeted the evening time slots for bidding. After calculating the total cost, the comprehensive power purchase cost is still better than local high-price power sources.”
Green Electricity and Summer Peak Relief
A standout feature of the transaction was its green electricity content. Over 75% of the pre-traded volume — 16.07 GWh — was green electricity, with entities’ declared green electricity purchase intentions for late June still exceeding 63.588 GWh.
The timing is critical. Southern China entered the summer peak season early in June 2026, with Guangdong’s electricity load setting new records three times and becoming the first Chinese province to exceed 170 GW of load. Power delivery from Anhui to Guangdong begins June 21, providing much-needed relief.
Regulatory Framework and Mechanism Design
The transaction was enabled by a joint notice from the National Development and Reform Commission (NDRC) and the National Energy Administration on May 21, 2026 (Document No. 734). Trading officially launched on June 1, starting with monthly and intra-month transactions.
Under the new mechanism, basic mutual-aid needs between Fujian and Guangdong are guaranteed through planned allocation, while remaining capacity is released to the market. Buyers simultaneously submit electricity volume and transmission rights price bids. When no congestion occurs, trades clear at the floor price of 25.6 yuan/MWh; when congested, bids are sorted from high to low. Revenue from trading fully offsets the capacity charges of both provinces, benefiting all commercial and industrial users.
Broader Implications for China’s Power Market
NDRC Spokesperson Li Chao outlined three objectives for transmission rights marketization: fair and efficient allocation of channel resources, reasonable cost recovery for transmission infrastructure, and optimized allocation of power resources across a wider area, as reported by Workercn.cn.
Wang Yi, Senior Manager of Power Market Management at China Southern Power Grid, called the transaction “groundbreaking,” adding: “For the first time, we have truly handed over the ‘right to use’ the channel to the market. Companies bid, the market allocates — whoever needs it most and bids highest gets priority use of the channel.”
The Yunxiao DC is one of only two transmission channels between China’s two major grid operators — State Grid Corporation of China and China Southern Power Grid. Three additional inter-grid projects (Chongqing-Guizhou, Hunan-Guizhou, and Hunan-Guangdong) have received national approval with total investment exceeding 15.6 billion yuan. Expected to be operational before summer 2027, they will add up to 900 MW of capacity and expand inter-grid channels to five.
What’s Next
The NDRC has indicated it will evaluate the Yunxiao DC pilot and expand the model to other cross-provincial channels. If successful, transmission rights trading could become a cornerstone of China’s unified national electricity market, helping to break down provincial barriers and enable optimal allocation of power resources across the country. For renewable energy producers in western and northern China, the mechanism offers a pathway to reach industrial users in the south, supporting corporate carbon reduction goals and compliance with international green trade rules such as the EU’s Carbon Border Adjustment Mechanism.