To implement the decisions and arrangements of the Party Central Committee and the State Council on accelerating green and low-carbon development and building a new power system, the National Development and Reform Commission and the National Energy Administration recently issued the Notice on Matters Concerning the Orderly Promotion of the Development of Direct Green Power Connection*, aiming to foster international competitive advantages in green manufacturing and enhance the capacity for local consumption of new energy. Currently, China’s direct green power connection is still in the exploratory stage, with provinces like Jiangsu already piloting projects for battery enterprises. There is an urgent national demand for innovating new energy consumption models, making the Notice a timely, targeted, and operable policy that will inject new impetus into national new energy development.
I. Policy Background
In recent years, key enterprises—especially export-oriented ones—have seen a significant surge in demand for direct procurement of green electricity. This momentum is largely driven by international factors: the European Union (EU) has taken the lead in launching the Carbon Border Adjustment Mechanism (CBAM) and the Battery Regulation, imposing equivalent carbon emission regulations on both domestic and overseas enterprises, with full implementation starting in 2026. Due to the high average carbon emission factor of China’s main power grid, products entering the EU must purchase CBAM certificates based on their carbon emissions, effectively paying a "carbon tax." Additionally, more multinational corporations and leading enterprises are requiring their supply chains to use green electricity; for example, Tesla has mandated that suppliers achieve 100% green electricity in production processes within a deadline, failing which they will be excluded from procurement for five years. Given the EU’s low recognition of "agreed green electricity" (such as green certificates) both within and outside the bloc, direct green power connection—physically linking power sources to users—has emerged as a universally accepted method.
On the other hand, China’s new energy capacity has grown rapidly in recent years, and the traditional model of relying on the main power grid for new energy consumption can no longer fully adapt to the needs of high-proportion integration of wind and solar power into the grid. In the first quarter of this year, China’s newly installed wind and solar power capacity reached 74.33 million kilowatts, with cumulative installed capacity hitting 1.482 billion kilowatts—surpassing thermal power for the first time. This leap in new energy installation has greatly advanced energy transition but also posed challenges to the safe operation of the main grid and stable power supply. Unlike Germany, which employs a three-level balancing system (cross-border/ inter-provincial balancing, community balancing, and redispatch mechanisms), many Chinese provinces rely solely on provincial (or regional) dispatch centers for balancing, placing the entire consumption burden on grid enterprises. Thus, there is a need to develop lower-level models for local new energy consumption, such as source-grid-load-storage integration, smart microgrids, and direct green power connection, to alleviate pressure on the main grid. Direct green power connection helps reduce network losses, improve source-load matching, and incentivize users to proactively enhance energy flexibility and share system regulation responsibilities.
However, the implementation of direct green power connection currently faces policy gaps and institutional barriers. Issues such as whether existing loads can adopt direct green power connection, whether surplus electricity can be fed into the grid, the proportion of self-generated and self-consumed electricity, who builds the dedicated lines, how transmission and distribution tariffs are paid, market participation mechanisms, and metering point settings have hindered project implementation, requiring urgent clarification.
II. The Notice Clarifies the Concept and Principles of Direct Green Power Connection
The Notice defines "direct green power connection" for the first time: a model where new energy projects (e.g., wind, solar, and biomass power) supply electricity directly to a single end-user via dedicated lines, enabling physical direct supply and electricity traceability. Unlike "agreed green electricity" in green certificate transactions or medium-to-long-term contracts, direct green power connection emphasizes a one-to-one physical link between power sources and loads. Notably, it is limited to point-to-point connections and cannot yet support point-to-grid models (e.g., building dedicated green power networks to supply multiple enterprises in an industrial park).
The Notice aligns with policies on distributed photovoltaic (PV) power. The Measures for the Development and Construction of Distributed Photovoltaic Power Generation (2025 Edition) states that "large industrial and commercial distributed PV should, in principle, be fully self-generated and self-consumed, connected to the user-side grid or supplying users via dedicated lines."In essence, the self-generation and self-consumption of distributed photovoltaic power is also a form of direct green power connection, but it does not require the construction of dedicated lines, thus avoiding many troubles. The "Notice" distinguishes itself from the policies on distributed photovoltaics, clearly stating that "for direct-connected power sources that are distributed photovoltaic, the relevant policies such as the Measures for the Development and Construction Management of Distributed Photovoltaic Power Generation shall apply".
The "Notice" clarifies the overall coordination responsibility of provincial energy authorities. In the planning section, it emphasizes that provincial energy authorities are responsible for overall planning, promoting the integration of direct green power connection into local energy, electricity, and territorial spatial layouts, and ensuring the coordinated allocation of power sources, loads, and lines. In the organizational guarantee section, it requires provincial energy authorities to refine requirements, properly conduct project management and operation monitoring. This fully reflects the idea that project planning, construction, and supervision are mainly the responsibility of provinces.
III. The Notice Specifies Planning and Construction Models for Direct Green Power Connection
The Notice clarifies key longstanding industry concerns regarding planning and construction:
1. Both existing and new loads are eligible: Unlike source-grid-load-storage projects, which require new loads, the Notice allows both existing and new loads to participate. This accommodates green electricity demand from existing enterprises and leverages their self-owned power plants for grid services.
2. Grid enterprises excluded from investment: Unlike Jiangsu’s policy, which permits grid enterprises to build lines, the Notice specifies that direct green power connection projects should be led by user-side enterprises, with power generators or third parties allowed to participate or co-invest. Grid enterprises are excluded from development, breaking the traditional grid-dominated access model and creating institutional space for diverse market entities.
3. Surplus electricity can feed into the grid in continuous spot market regions: Unlike source-grid-load-storage projects, which prohibit reverse power flow, the Notice allows regions with continuous spot market operations to prioritize self-consumption with surplus electricity fed into the grid. Regions without continuous spot markets prohibit reverse flow, aligning with the National Energy Administration’s push for spot market development.
IV. The Notice Stipulates Operational Models for Direct Green Power Connection
Grid-connected direct green power sources are subject to grid dispatching but retain significant autonomy. The Notice requires grid-connected sources to comply with dispatch management based on access level and capacity, but dispatch agencies will not interfere with normal operation curves except during safety-related emergencies, granting substantial autonomy while reserving emergency backup measures.
Responsibility boundaries between green power and the public grid are clarified: Enterprises receive grid supply guarantees based on declared capacity, with excess demand borne by the enterprise, ensuring accurate load declarations and clear operational responsibilities. This mechanism encourages energy users to scientifically assess grid connection capabilities, rationally configure energy storage and adjustable loads, and proactively enhance system regulation capacity.
Enhancing overall regulation capacity is encouraged: Direct green power projects are required to reduce system regulation pressure through energy storage and load optimization. To provide clear guidelines, the Notice mandates that projects set load peak-valley difference targets during planning and prohibit reverse power flow during periods of new energy consumption difficulties, improving operability.
V. The Notice Clarifies Trading and Pricing Policies for Direct Green Power Connection
Participation in power market transactions as a whole: Direct green power connection is not a privileged supply model outside the market but a new type of market entity (e.g., smart microgrids or virtual power plants) participating in power markets, aligning with national efforts to liberalize electricity markets.
Payment of grid fees and surcharges: The Notice requires projects to pay transmission and distribution tariffs, system operation fees, policy cross-subsidies, and government funds/surcharges in accordance with national regulations, prohibiting local exemptions to ensure fair economic responsibility.
Standardized electricity metering is emphasized: To ensure accurate billing for direct green power and prevent regulatory evasion, the Notice mandates metering devices at project access points and internal points (e.g., generation, plant consumption, self-consumption, and energy storage), ensuring transparent electricity quantities, accurate settlements, and strict prohibition of meter bypassing.
Through market mechanisms and policy design, direct green power transactions will create a win-win situation for three parties: Users gain stable clean electricity and avoid carbon taxes; generators secure new local consumption channels and realize green value; and grid enterprises protect their revenue through transmission and distribution tariffs. This inclusive and targeted policy is its greatest strength.
Overall, the Notice implements President Xi Jinping’s important speech at the symposium on private enterprises, providing feasible carbon reduction pathways for export-oriented manufacturing and new local consumption models for new energy. It systematically addresses operational challenges in planning, investment, construction, dispatching, market trading, and pricing, forming a comprehensive, replicable institutional framework. As a key component of the new power system, standardized direct green power connection will also provide insights for source-grid-load-storage coordination and smart microgrids,promote a more efficient, safe and sustainable green energy consumption system in China.
(Pei Shanpeng, Head of the War Situation Research Institute, Economic and Technological Research Institute of State Power Investment Corporation)
Source: National Energy Administration
