China proposes moving away from guaranteed full offtake towards market-based electricity trading and dispatch
The draft introduces minimum renewable energy consumption targets, stronger Green Electricity Certificate provisions and penalties for non-compliance
New provisions cover energy storage, distributed solar, equipment recycling, and supply chain security
China is proposing a shift to market-based renewable electricity trading while introducing stricter consumption requirements and penalties for non-compliance as part of a broader revision of its Renewable Energy Law.
A revision would change how renewable electricity is traded, priced, and consumed in China. It also seeks to address challenges related to integrating more solar and wind power into the electricity system as the country targets 3.6 TW capacity by 2035 (see China Announces 3.6 TW AC Solar & Wind Target For 2035).
This proposal builds on China’s ongoing transition towards market-based renewable electricity trading. Following the introduction of the Contracts for Difference (CfD)-style pricing mechanism in 2025, the draft law seeks to address wider market, grid integration, and renewable consumption requirements (see World’s Biggest Solar Market Moving Towards CfD Mechanism).
The draft revision of the Renewable Energy Law was submitted for the first reading by the 25th session of the Standing Committee of the 14th National People’s Congress. It was subsequently published for public consultation on the NPC website on November 10, 2026. The consultation period is 30 days.
One of the major proposed changes is a shift away from the existing guaranteed full-offtake framework toward greater participation in electricity markets.
The draft amendment removes the existing provision requiring grid companies to purchase the full amount of renewable electricity generated by eligible projects within their grid coverage. Under the proposed framework, renewable energy generators will participate in electricity market transactions in accordance with applicable regulations.
It further proposes that the electricity volume and on-grid price of renewable power participating in market transactions will be determined through those transactions. Electricity that does not participate in market trading will continue to be priced in accordance with applicable national pricing policies.
The draft proposes a price settlement mechanism to ensure reasonable returns for renewable energy developers. It also calls for improvements to electricity ancillary services and capacity pricing to support reliable power supply.
China also proposes to introduce a mechanism combining mandatory and voluntary renewable energy consumption. It calls for minimum renewable energy consumption targets and provincial-level renewable electricity consumption obligations.
These targets could be met through self-generation and consumption, direct green electricity connections, green power trading, and Green Electricity Certificate (GEC) trading or transfers.
The draft also proposes penalties for entities that fail to meet minimum renewable electricity consumption targets. Under Article 70, they could face fines of 5-10 times the GEC cost corresponding to the shortfall. The penalty would be calculated using the average GEC market transaction price in the month before the compliance deadline. Violations would also be recorded in credit records and subject to closer regulatory supervision.
The draft further links GECs with carbon emissions accounting, product carbon footprint accounting, and carbon market management.
The draft also calls for improvements to the power grid’s ability to accommodate and manage renewable electricity. It proposes the establishment of a unified national electricity market, along with fair and non-discriminatory grid access for eligible renewable energy generators.
Power grid enterprises will be required to disclose information on grid connection, transmission capacity, and operational status, enabling renewable energy generators to access it.
It also supports the development of new energy storage, vehicle-to-grid interaction and adjustable demand-side resources to improve power system flexibility and stability.
For distributed solar, the draft requires provincial energy authorities to assess grid hosting capacity and identify measures to improve it. It also supports the upgrading of eligible wind and solar projects. Projects that have reached the end of their designed operating life could continue operating after an assessment, if they meet the required conditions.
The draft also promotes integrating renewable energy systems with buildings and transport infrastructure.
Article 57 of the draft calls for a recycling framework for retired wind and solar equipment. This would cover green design, standardized recycling, high-value utilization, and environmentally sound disposal.
It also proposes risk assessment, monitoring, and early-warning mechanisms to strengthen the security and reliability of renewable energy industry supply chains.
The draft further provides that China may take corresponding measures against countries or regions that impose discriminatory restrictions on its renewable energy industry.