Green Electricity Direct Connection Fee Payment Standard

A dedicated line is becoming a new path to alleviate China's renewable energy consumption problem, meet the diversified energy needs of enterprises, and alleviate the difficulties of carbon footprint certification for export enterprises.

In November 2022, the Inner Mongolia Autonomous Region included 21 projects in the list of the first batch of green power supply projects for industrial parks in the autonomous region. In November 2024, the first green power supply project for industrial parks in the Inner Mongolia power system was successfully energized.

In February 2025, Jiangsu Province launched the construction of five pilot projects for green electricity direct connection with well-known new energy companies such as Trina Solar and CATL. The focus is on improving the green electricity consumption capacity and meeting the diversified energy needs of enterprises.

In early June this year, green electricity direct connection projects finally received policy support at the national level.

The National Development and Reform Commission and the National Energy Administration jointly issued the "Notice on the Orderly Promotion of the Development of Green Electricity Direct Connection" (Development Reform Energy [2025] No. 650, hereinafter referred to as "Document No. 650"), for the first time opening the door for point-to-point direct connection of green electricity at the national level.

The core breakthrough of this document lies in the fact that it explicitly allows green power projects such as photovoltaic and wind power to directly supply electricity to specific users through dedicated lines, without the mandatory requirement of full grid connection or only through the unified purchase and sale by power grid enterprises.

Breaking Barriers

Direct Trading Unleashes the Potential of Green Electricity

By the end of March 2025, the total installed capacity of wind and photovoltaic power generation in China reached 1.482 billion kilowatts, historically exceeding the installed capacity of thermal power, and will also become the norm in the future.

The continuous increase in the installed capacity of new energy sources has simultaneously highlighted the pressure on its consumption.

Data from the National New Energy Consumption Monitoring and Early Warning Center shows that in March 2025, the utilization rates of wind power and photovoltaic power generation nationwide were 92.8% and 93.6%, respectively, down 3.5 and 2.8 percentage points year-on-year, with utilization rates in provinces (regions) such as Qinghai, North Mongolia, and Shaanxi below 90%.

At the same time, with the deepening development of global green and low-carbon transformation, the demand for green energy by enterprises is also becoming increasingly prominent and urgent. International green trade barriers are continuously increasing, putting pressure on Chinese enterprises' exports, and the green electricity use requirements transmitted by multinational corporations and leading enterprises to the supply chain are also becoming increasingly stringent.

"The issuance of documents on green electricity direct connection is, firstly, to meet the needs of nearby consumption of new energy, and to explore integrated development models of new energy production and consumption through green electricity direct connection projects, etc., to improve the utilization efficiency of new energy resources. Secondly, it is to meet the green electricity consumption needs of traditional and emerging high-energy-consuming industries in response to green trade barriers." A relevant official from the National Energy Administration said in an interview that green electricity direct connection also provides users with a choice to reduce electricity costs.

It is not difficult to see that the green electricity direct connection policy carries the dual strategic goals of breaking the domestic consumption deadlock and meeting the diversified energy needs of enterprises.

"This innovative mechanism breaks through the traditional power grid architecture model, building a new power ecosystem of 'power source-user' direct connection, which can prevent the capacity limitations of the power grid from forming a two-way constraint on new energy generation and user electricity demand, thereby improving the consumption rate of new energy." said Wu Junhong, deputy director of the Power Distribution and Sales Research Center of the China Energy Research Society.

Unlike green certificate trading or long-term power purchase agreements, the core characteristic of green electricity direct connection is to achieve physical traceability and point-to-point supply of electricity through dedicated power lines and supporting facilities.

In response to the rigid demand of various users, including high-end manufacturing and multinational enterprises, for clear physical traceability of green electricity, Wu Junhong pointed out that Document No. 650 proposes to build a "physical direct connection + data traceability" mechanism, reasonably configuring metering tables to record the amount of green electricity used, providing users with traceable green electricity consumption certificates, and helping enterprises meet the needs of ESG rating, carbon footprint management, and other clear physical traceability of green electricity.

Innovation

Building a Chinese-style Green Electricity Direct Connection System

As early as 2021, the "Implementation Opinions on Accelerating the Transformation and Development of Rural Energy to Support Rural Revitalization" jointly issued by the National Energy Administration, the Ministry of Agriculture and Rural Affairs, and the National Rural Revitalization Administration proposed "innovative development of new energy direct supply."

Although Shanxi, Shandong, Inner Mongolia, and Jiangsu provinces have issued relevant documents on green electricity direct connection, there is no clear document supporting their definition and implementation details.

Document No. 650 clarifies the definition of green electricity direct connection at the national level, namely, wind power, solar power, biomass power generation, and other new energy sources do not directly connect to the public power grid, but supply green electricity to a single power user through a direct connection line, which can achieve clear physical traceability of the supplied electricity.

Ye Xiaoning, deputy director of the New Energy Research Institute of the State Grid Energy Research Institute, believes that compared with the previous independent exploration by local governments, Document No. 650 has built a unified institutional framework. This framework clearly defines the physical technical interface and responsibility division standards, solving the problem of fragmented rules in the spontaneous exploration by local governments and enterprises.

Document No. 650 regulates project construction, and in addition to new loads and existing loads, it also proposes that export-oriented enterprises with rigid carbon reduction needs utilize surrounding new energy resources to explore the implementation of green electricity direct connection for existing loads.

Wu Zhicheng, associate professor at the School of Electrical Engineering, Xi'an Jiaotong University, said that this policy is not limited to enterprises affected by the EU Carbon Border Adjustment Mechanism or the EU's new battery regulations, but covers all export enterprises facing international carbon reduction requirements. This decentralization mechanism empowers local governments with flexible decision-making power, encouraging them to adopt differentiated implementation paths based on local power supply and demand, new energy consumption, and other actual conditions.

In the traditional power system, power grid enterprises bear the responsibility for the power supply of all access projects. However, with the large-scale access of new energy, this "unlimited responsibility" model has led to an excessive burden on the power grid and low resource allocation efficiency, to a certain extent restricting the construction process of the new power system.

"Document No. 650 achieves a transformation from 'unlimited responsibility' to 'limited and evaluable responsibility' by requiring projects to independently and reasonably declare their capacity and using this as the basis for determining the power supply responsibility of the power grid." Wu Zhicheng further explained that, on the one hand, the declared project capacity is the upper limit of the power grid's power supply responsibility, and the exceeding part is borne by the project itself, implementing the principle of "who benefits, who pays," effectively avoiding the unlimited responsibility of the power grid. On the other hand, it encourages projects to improve their self-balancing capabilities through energy storage and demand response measures, thereby reducing their reliance on the power grid. In addition, the declared capacity is directly linked to the cost, which is in line with the direction of market-oriented reforms.

Solution

Reshaping the Economic Viability of Green Electricity Direct Connection through Cost Boundaries

The implementation of the green electricity direct connection policy has opened up new avenues for enterprises to optimize their energy structure—newly added load enterprises can reduce energy costs, existing self-owned power plant enterprises can achieve low-carbon or even zero-carbon operations, export-oriented enterprises can overcome green barriers to trade, and stalled renewable energy projects can reduce "wind and solar curtailment," representing an innovative move in the energy sector.

"Grid-connected green electricity direct connection projects need to balance fluctuations in power generation and load in real time. Users need to bear the construction costs, have high requirements for prediction accuracy and control systems, and face uncertainties in market transactions and returns, leading to challenges in terms of safety, economics, and technology during project implementation." Ye Xiaoning told the reporter.

Profitability is the core driving force for participating entities. Although Document No. 650 does not guarantee project profitability, it has established a market-oriented mechanism framework centered on electricity market transactions and peak-valley price differences, granting the project operational strategies autonomous decision-making power.

Project profitability is affected by multiple factors, including renewable energy resource endowment, load characteristics, energy storage configuration, and market conditions. The payment of transmission and distribution fees, system operation fees, policy cross-subsidies, government funds, and surcharges are also key considerations in the enterprise cost structure.

Document No. 650 stipulates that green electricity direct connection projects should pay transmission and distribution fees, system operation fees, policy cross-subsidies, government funds, and surcharges in accordance with the relevant regulations of the State Council's price and finance authorities. Local authorities must not violate national regulations by reducing or exempting such fees.

Relevant officials from the National Energy Administration, in an interview, stated that this measure aims to fairly share the responsibilities of regulating the power system and social responsibilities, and to enhance the ability of the public power grid to continuously provide regulation services for the entire power system.

The reporter learned that, regarding the specific fee standards and calculation methods that participating entities are concerned about, relevant departments are actively promoting the development of a pricing mechanism for on-site consumption of renewable energy transmission and distribution, the core of which is also the principle of "fair sharing".

"Enterprises can improve project economics by optimizing the self-generation and self-consumption ratio, configuring energy storage, and other measures to reduce costs, while also obtaining additional income by selling grid-connected electricity and providing ancillary services." Wu Zhicheng suggested.

Ye Xiaoning believes that green electricity direct connection, as a new industry and model for a new power system, conforms to current requirements. Electricity users will accelerate exploration to reduce electricity costs and meet the needs of green energy consumption, but it is not the case that the more renewable energy is built, the better. Its economic viability has a ceiling and will ultimately become a beneficial supplement to renewable energy development.

Green electricity direct connection transactions are not an isolated policy, but an important part of building a new power system that is "clean and low-carbon, safe and sufficient, economically efficient, coordinated supply and demand, and flexible and intelligent." "Document No. 650 is a bold attempt. Taking the "green electricity direct connection" pilot project as an opportunity, we can bring together the efforts of governments, enterprises, and research institutions, increase investment in technological research and development, improve market mechanisms and regulatory systems, and open up new paths for the efficient use of clean energy." Chen Dayu said.

Source: China Electric Power News