Policy Interpretation | Green Electricity Direct Connection Policy Uses Institutional Innovation to "Respond in Four Ways" to National Strategies

Green electricity direct connection is a model in which wind, solar, biomass, and other new energy sources supply green electricity to a single electricity user through a direct connection line, achieving clear physical traceability of electricity. The National Development and Reform Commission and the National Energy Administration, breaking with tradition, jointly issued the "Notice on the Orderly Promotion of the Development of Green Electricity Direct Connection" (hereinafter referred to as the "Notice"), achieving "four responses": responding to social demands, responding to industry development, responding to system security, and adapting to electricity reform. Through institutional innovation, it serves the national strategy, promotes the development of new productive forces, and highlights the political consciousness and service-oriented government responsibility of the National Development and Reform Commission and the National Energy Administration.

I. Responding to Social Demands and Quickly Issuing Policies

With the implementation of the "carbon peak and carbon neutrality" strategy and the leapfrog development of new energy sources, some electricity users have earlier proposed the simple understanding and policy requirements of on-site consumption and green electricity direct connection. In recent years, especially during the national "Two Sessions," members of the National People's Congress, members of the Chinese People's Political Consultative Conference, and experts and scholars have also put forward many policy suggestions regarding green electricity direct connection from the perspective of high-quality economic and social development.

Since 2023, the EU has proposed framework policy options for green electricity direct connection for imported goods. First, it has introduced a carbon border adjustment mechanism, which aims to levy taxes on the implicit carbon emissions of some imported goods, aiming to make carbon prices equal to the European carbon market; when identifying the implicit carbon emissions of goods' electricity consumption, this mechanism proposes a physical direct connection model and an agreement recognition model that allows calculation according to actual emissions. Second, it has revised the new battery regulations, aiming to establish a unified battery lifecycle regulatory framework; its supporting details clarify the two recognized electricity carbon footprint calculation models: national average electricity consumption mix and direct connection electricity.

The National Energy Administration attaches importance to the benign interaction between energy and economic development. In the "Guiding Opinions on Vigorously Implementing Renewable Energy Substitution Actions" (NDRC Energy [2024] 1537), it proposes "supporting green electricity direct supply and integrated source-grid-load-storage projects for the development of new infrastructure"; in the "Guiding Opinions on Supporting the Innovative Development of New Types of Operating Entities in the Power Sector" (NEA Law Reform [2024] 93), it proposes "exploring the establishment of a mechanism to increase corporate green electricity supply through new energy direct connection"; and in the "2025 Energy Work Guiding Opinions" (NEA Planning [2025] 16), it proposes "researching and formulating policies and measures for green electricity direct connection."

The issuance of this document actively responds to social concerns and industry development suggestions, proposes operable solutions for green electricity direct connection projects, clarifies the policy goals of green electricity direct connection meeting the green energy needs of enterprises and improving the level of on-site consumption of new energy sources, and reflects the excellent governance level and adaptability of the National Development and Reform Commission and the National Energy Administration under international changes and energy transformation.

II. Responding to Industry Development and Strengthening Planning Guidance

The power industry has obvious network-based technical characteristics and is highly professional. Promoting related work requires overall planning and guidance. General Secretary Xi Jinping pointed out: "Scientific planning is the greatest efficiency, planning mistakes are the greatest waste, and planning turmoil is the greatest taboo." The implementation of green electricity direct connection projects must adhere to the principles of prioritizing safety, being environmentally friendly, having equal responsibilities and rights, and matching sources and loads during construction and operation, using planning to guide the healthy development of the energy and power industry.

To this end, the Notice deploys strengthened planning guidance in four aspects. First, in project construction, four scenarios are distinguished, and regulations are classified for existing loads, new loads, export-oriented enterprises, and new energy consumption restrictions. In particular, for existing loads with self-owned power plants, the implementation path of green electricity direct connection is proposed under the premise of full payment of the renewable energy development fund. Second, in terms of overall planning, "three inclusions" are emphasized: the scale of wind and solar power generation should be included in the provincial-level new energy power generation development and construction plan; the project construction plan should be included in the provincial or municipal energy, power, and land spatial planning; and special cases of access to the 220 (330) kV power grid should be included in the scope of special assessments of power system safety risks. Third, in terms of model innovation, three clarifications are emphasized: the responsible unit is clear, in principle, the load is the responsible unit for the green electricity direct connection project; the investment subject is clear, specifying the list of allowed investment subjects for project power sources and direct connection lines; and the source-load relationship is clear, power sources and loads that are not the same investment subject must sign a multi-year power purchase agreement or an energy performance contract, clarifying responsibilities. Fourth, in terms of source-load matching, four proportion indicators are clarified: areas where the spot market has not been continuously operated cannot send electricity back to the public power grid; the proportion of self-generated and self-used new energy in the total available power generation of the project is not less than 60%; the proportion of total electricity consumption is not less than 30%; and the proportion of grid-connected electricity in the total available power generation is generally not more than 20%.

III. Corresponding to System Security and Emphasizing Operation and Management

Adhering to a systems perspective and properly handling major relationships between development and security is a principle clearly stated by the Third Plenary Session of the 20th Central Committee for further comprehensively deepening reforms. Power safety is related to national economy and people's livelihood and economic and social development, and safe operation is the lifeline of the power system. Improving the power safety governance system, strengthening operational safety management, using high-level safety to guarantee the high-quality development of the new power system, supporting the construction of a new energy system, and achieving the carbon peak and carbon neutrality goals on schedule are the meaning of the new energy security strategy.

To this end, the Notice deploys strengthened operation and management in five aspects. First, in terms of safety management, three requirements are put forward for green electricity direct connection projects: implementing safety production management measures, carrying out risk control and hidden danger investigation and governance, and assessing and eliminating equipment failures and safety risks. Second, in terms of grid access, requirements are put forward for both the project and the grid, emphasizing that grid companies should adhere to the principle of fair and non-discriminatory openness. Third, in terms of dispatching and operation management, four matters are clarified. While emphasizing the power of "internal resource synergy optimization" for green electricity direct connection projects, four matters are clearly required: access to the load management system or dispatch automation system, acceptance of dispatch management, being observable, measurable, adjustable, and controllable, and execution of safety protection regulations. Fourth, in terms of the interface of responsibilities and rights, three responsibilities are clarified: safety responsibility, economic responsibility, and social responsibility (power supply responsibility and responsibilities related to power outages), especially emphasizing equal rights and responsibilities, with projects independently applying for grid-connected capacity and independently bearing the responsibility for power supply exceeding the declared capacity. Fifth, in terms of system friendliness, two dimensions are emphasized: internal and external. On the one hand, green electricity direct connection projects should internally improve their flexible adjustment capabilities; on the other hand, when interconnected with the large power grid, the peak-to-valley difference of the exchanged power should be limited, and backfeeding, reactive power, and power quality should be controlled.

IV. Adapting to Electricity Reform and Clarifying Market Mechanisms

The market is an effective way to allocate resources, and marketization is the general trend of power system development. After 10 years of deepening power system reform, the country has entered a new stage of comprehensively constructing a power spot market and initially establishing a national unified power market. Not long ago, the National Development and Reform Commission and the National Energy Administration issued the "Notice on Deepening the Market-Oriented Reform of New Energy On-Grid Electricity Prices to Promote the High-Quality Development of New Energy" (NDRC Price [2025] 136), further standardizing the system for promoting the full entry of new energy on-grid electricity into the market.

Effectively integrated into the current power market environment, the Notice emphasizes three points regarding green electricity direct connection projects in terms of trading and pricing mechanisms. First, it emphasizes participation in the market as a whole. It reiterates the equal market status of green electricity direct connection projects and requires that they should, in principle, participate in power market transactions as a whole, and that sources and loads that are not the same investment subject should participate in market transactions in an aggregated form. Second, it emphasizes the reasonable payment of relevant fees, and local authorities must not reduce or exempt relevant fees in violation of national regulations. Third, it emphasizes standardized metering and settlement, using the project access point as the reference point for metering and settlement, and prohibiting the use of electricity through bypassing the installed electricity metering devices.

In short, the Notice, while adhering to the objective laws of the power system, addresses the urgent needs of enterprises and local governments, using institutional innovation to solve the practical problems of green energy demand and on-site consumption of new energy sources. This is highly commendable. Whether the Notice can be effectively implemented requires policy refinement and management, monitoring, and review by provincial government authorities; support and service from power grid companies and market operating institutions; and guidance and supervision at the national level. Looking to the future, the effectiveness of green electricity direct connection projects is visible, and the coordinated development of energy and the socio-economy is promising. (Wang Peng, Professor at North China Electric Power University and Vice President of the China Rural Energy Industry Association)