Central theme of upcoming efforts is addressing challenge of renewables

As China accelerates its march toward becoming a global energy powerhouse, top officials are signaling a decisive shift toward deeper market-oriented reforms to secure energy supplies and manage the growing volatility of renewable power.

Wang Hongzhi, head of the National Energy Administration, emphasized the urgent need to build a unified national energy market and leverage price signals to drive the nation's green transition.

By accelerating the development of pricing mechanisms and driving institutional innovation, the administration vows to further enhance governance capabilities and provide robust momentum for establishing the nation as an energy powerhouse, Wang said in an article.

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A central theme of the upcoming reforms is addressing the inherent challenges posed by the rapid expansion of renewable energy, said Wang, adding that as solar and wind power take on a larger share of the energy mix, their intermittent nature, which is random and volatile, significantly increases grid instability.

To counter this, the NEA aims to utilize market mechanisms and price signals to guide investment. By establishing a value transmission chain that reflects real supply and demand, China aims to incentivize the development of baseload and flexible regulation resources.

This market-driven approach is designed to ensure reliable supplies while facilitating the orderly replacement of fossil fuels, thereby safeguarding national energy security.

The NEA's vision for the 15th Five-Year Plan (2026-30) involves a comprehensive overhaul of electricity, oil, gas and coal market systems to forge a unified national energy market.

Crucially, the government aims to foster "new quality productive forces" within the energy sector. By reflecting technological advancements and efficiency gains in pricing, the market will direct capital toward critical innovations, accelerating the integration of AI and energy, and promoting new models like smart microgrids and green hydrogen.

The foundation for these reforms is already being laid.

According to data released by the CNPC Economics and Technology Research Institute, China's energy security capacity is steadily improving.

Domestic energy production has grown at an average annual rate of 3.6 percent over the past decade, driving the energy self-sufficiency rate up by 0.5 percentage point annually, said Lu Ruquan, president of the institute.

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By the end of 2025, the self-sufficiency rate is expected to have reached 83.1 percent, he said during a strategic industry event preview ahead of the Beijing Energy Congress 2027.

Lu highlighted the remarkable strides in the nation's green transition.

China's newly installed wind and solar capacity has exceeded 100 million kilowatts for six consecutive years, and is projected to have accounted for over half of the global total by the end of 2025, he said.

"Looking ahead, the focus is clearly set on utilizing market forces not just to trade energy, but to fundamentally reshape its production, consumption and technological evolution."

Contact the writers at zhengxin@chinadaily.com.cn