On April 13, the first green electricity transaction between small power users and grid-parity renewable projects was organized by Guangzhou Power Exchange in Guangdong and Hainan. 8 power users and suppliers have concluded green electricity contracts for 3.27GWh of power transactions through bi-lateral negotiation.
In general, until now, only power users of 10kV and above who had registered as buyers in the power trading market could directly buy green power from the power market. The recently released South China Green Electricity Trading Regulation enables small users, who are using the grid company as a retailing agent, to buy green electricity through a subscription service with the Guangzhou Power Exchange.
1GWh of the 3.27GWh was purchased by the Boao Asian Forum Hotel, who will use the green power for its entire power consumption later this year. The hotel is a typical small power user not eligible for signing mid-long term forward power contracts in the market.
This progress made by China Southern Grid (CSG), the major grid operator in South China, is quite encouraging for power users in the region. However, improvements still need to be made concerning transaction transparency. Compared with State Grid Corporation of China (SGCC), CSG has laid a sound green electricity trading regulatory framework in the provinces in its jurisdiction.
The Southern Region Renewable Power Trading Management Method (南方区域可再生能源电力交易管理办法) specifies that green electricity trading comprises two transaction models: direct trading and subscription trading:
- Direct trading refers to the transaction process between power users/power retailers and renewable power generation companies.
- Subscription trading means the power users who use grid companies as trading agents, obtain green electricity through grid company’s power supply and power retailing service.
The key difference between both options is that for direct trading, as its name implies, power users can be directly engaged in the green electricity price negotiation with renewable power companies. It is suspected that the power grid companies will charge a margin for reselling green electricity they acquire at the local coal-fired benchmark price (or even less in some cases).