Two departments: will raise the proportion of fixed costs recovered by capacity electricity price for coal-fired units to no less than 50%.

On January 30, the National Development and Reform Commission and the National Energy Administration issued a notice on improving the capacity electricity price mechanism on the generation side. It mentioned the improvement of capacity electricity price mechanisms for coal-fired and natural gas power generation. Localities are required to increase the proportion of fixed costs recovered through capacity electricity prices for coal-fired power units to no less than 50% in accordance with the requirements of the "Notice on Establishing a Capacity Electricity Price Mechanism for Coal-fired Power" and can further increase it based on actual conditions such as local market development and coal-fired power utilization hours. The notice also mentioned the improvement of electricity market trading and pricing mechanisms. After the improvement of the coal-fired capacity electricity price mechanism, localities can adjust the lower limit of long-term market transaction prices for coal-fired power within the province based on electricity market supply and demand, changes in the operating costs of participating units, etc., while ensuring the balance of electricity quantity. They are also encouraged to sign flexible price mechanisms in long-term contracts that reflect market supply and demand and changes in generation costs. When signing long-term contracts within the province, localities are not allowed to require fixed prices, but can require a certain percentage of electricity in annual long-term contracts to be priced flexibly to reflect real-time supply and demand based on electricity supply and demand, market structure, etc. Furthermore, the notice mentioned the establishment of a new and independent storage capacity electricity price mechanism on the grid side. Independent new storage energy stations on the grid side that serve to ensure the safe operation of the power system and do not participate in storage and dispatch can be given capacity electricity prices. The level of capacity electricity prices is based on the local coal-fired capacity electricity price standard, converted based on the peak capacity by a certain proportion, and taking into account factors such as the progress of electricity market development and the demand of the power system. Independent new storage energy stations on the grid side are managed in a list-based manner, with management requirements to be clarified separately by the National Energy Administration based on the analysis of power supply and demand situations and supply guarantee measures, and the specific list of projects to be formulated by the provincial energy authorities in conjunction with the price regulatory authorities. Source: National Development and Reform Commission, National Energy Administration Notice on Improving Capacity Electricity Price Mechanism on the Generation Side.