In May 2025, China's National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) jointly released the "Notice on Advancing the Orderly Development of Green Power Direct Supply," marking the first national-level policy framework for this initiative. This move aligns with the 20th Third Plenary Session's call to scale up green power consumption.
Key Beneficiaries: Multinational and export-oriented companies facing domestic and international low-carbon compliance requirements (e.g., EU CBAM, China's national ETS)
Policy Priorities
- Optimizing Renewable Integration: Shifting from subsidy-driven development to demand-driven power planning. The new approach balances capacity expansion with consumption needs, easing grid integration pressure for renewables.
- Supporting Export Competitiveness: For the first time, the policy defines "physical traceability" for GPDS, with hour-level data tracking. This addresses key compliance gaps under the EU CBAM, Battery Regulation, and other frameworks where traditional PPAs are not recognized.
- Accelerating Grid Reform: Grid companies are restricted to their role as public infrastructure providers and barred from investing in GPDS projects. Power consumers, generators, and other market players are encouraged to invest directly, boosting market participation.
Market Opportunities
- Renewables Investors:
- Eased Market Access: Private enterprises, energy service providers, and cross-sector investors can now participate in GPDS projects via dedicated transmission lines.
- License Exemptions: Renewable projects like distributed solar PV, dispersed wind, energy storage, smart microgrids, and those involved in GPDS, are exempt from power business licensing, streamlining regulation to reduce costs and speed up project deployment.
- Power Generators:
- Revenue Stability: By securing long-term (10+ year) PPAs with data centers, chemical producers, and other large electricity consumers, power generators can lock in electricity tariffs and reactivate stranded assets.
- Expanded Financing Channels: Alignment with international green standards makes them attractive to cross-border green bonds.
- Large Power Consumers
- Export Compliance Cost Reduction: In ammonia production, for instance, using green power can cut compliance costs by 22% compared with EU carbon allowance purchases (392 yuan/tonne vs. 504 yuan/tonne). However, for companies not engaged in export, their green power costs remain above domestic CEA prices.
- Alignment with Global Standards: Physical direct connection to renewable sources with hourly data traceability meets requirements of international rules like the EU Battery Regulation, allowing overseas traders to cut compliance costs by partnering with GPDS project participants.
Implementation Challenges
- Fragmented Local Rules: Key details such as the definition of "local consumption" (in terms of the distance), minimum ratio of electricity fed into grid, vary by region, requiring cross-regional businesses to navigate inconsistent standards.
- Unclear Cost Allocation: Grid transmission and distribution fees and cost-sharing mechanisms for frequency regulation and reserve capacity lack clear policy guidance, posing potential conflict of interest.
- High Upfront Investment: The construction of transmission lines (220kV) exceeds 1 million yuan per kilometer, while 1MW/2MWh energy storage facilities cost 8-11 million yuan, leading to long investment payback periods.
The full report provides an in-depth analysis of the Notice on Advancing the Orderly Development of Green Power Direct Supply issued in May 2025. Subscribe to access:
- Policy Highlights: Reshaping renewable investment models and helping exporters overcome global carbon emission barriers
- Comparative Analysis: National GPDS vs. Local Pilots and 'Behind-the-Meter' Power Sales
- Market Impact: Implications for generators, electricity consumers, and grid companies
- Policy Implementation: Key challenges for GPDS deployment
- Strategic Linkages: How GPDS supports China's push for zero-carbon industrial parks and factories
The above content is the major conclusions and highlights extracted from China (Energy Transition) Policy Perspective. To get detailed full text, send an email to glconsulting@mysteel.com.
