China's electricity pricing system is shifting from a fixed-fee model to a market-linked regime. The overhaul aims to narrow the gap between wholesale and retail prices and reflect volatility in power supply and demand, and is expected to trigger changes in corporations' power-use strategies and in the structure of the energy storage system (ESS) industry.
On the 17th, according to Jiemian, more than 10 regions including Sichuan, Hubei, and Liaoning scrapped fixed electricity tariffs and adopted a system linked to real-time market prices. This is a follow-up under the National Development and Reform Commission's (NDRC) power market rules, with the core being the marketization of retail power rates that the government had fixed by time blocks—peak, shoulder, and off-peak—across 24 hours.
Behind this is a mismatch between wholesale and retail pricing systems. According to authorities, wholesale rates have been gradually marketized for years and now are largely determined by market forces, but retail rates remain tied to government-set tariffs.
On top of that came changes in power supply-demand structures driven by the expansion of renewable energy. As the share of solar power surged, daytime saw excess electricity and falling wholesale prices, while evenings—when generation dips but demand concentrates—saw prices rise, a pattern that has become entrenched. In fact, some regions have frequently seen "negative pricing" due to oversupply.
The problem is that such price signals from the wholesale market hit the wall of "fixed retail tariffs" and fail to reach the retail end. Even if wholesale prices fall into negative territory due to surplus power, retail prices remain unmoved, giving consumers no economic incentive to increase usage. The latest pricing overhaul is seen as a move to correct this market distortion. By linking retail rates to real-time market prices, the aim is to prompt users to optimize consumption on their own in line with supply-demand conditions.
According to the report, the rate change directly affects industry. As electricity prices fluctuate in real time, corporations are now compelled to adjust power-use strategies such as production hours. The more power-intensive the sector, the greater the likelihood that expense competitiveness will hinge on when electricity is used.
The ESS industry has also entered a survival-of-the-fittest phase. Until now, ESS companies stored power during low-load hours and discharged during high-load hours to capture spreads. Because time-of-use prices were fixed, the spreads were also fixed, yielding a kind of "low-risk return." But with rates changing in real time, companies' own operational capabilities now determine profitability. Lu Jiabin, a power market research expert at the China Photovoltaic Industry Association, told Jiemian, "ESS companies need to move away from policy reliance and diversify their revenue models into ancillary services, capacity markets, and virtual power plants (VPPs)."
Meanwhile, the NDRC drew a line, saying the overhaul will not affect rates for general households and agricultural use. For industrial users, it plans separate institutional improvements to offset overall expense burdens.