China’s Renewable Energy Overhaul Spurs Push Into Power Trading

(Bloomberg) Rooftop solar developer PCG Power plans to launch a trading platform next month to tap into China’s growing market for electricity.

Policy reforms that have undercut profits on renewables are creating opportunities in trading, Chairman Li Wenxuan said in an interview in Beijing. The company, which also supplies energy storage and manages electricity purchases for large industrial users, is targeting transactions of 10 billion kilowatt-hours in 2027, enough to power a small European country for a year. 

Although China is the world’s largest electricity consumer, it lags the US and Europe when it comes to free-market transactions that set prices by matching supply with demand. The government is looking to change that by establishing a unified national market by the end of the decade.

PCG’s more immediate trigger is a policy that went into effect last year, known as Document 136, which forces wind and solar projects to sell their electricity on the open market instead of guaranteed purchases from the grid. 

“Document 136 ended guaranteed volume and guaranteed pricing, but at the same time it opened the door to market-based operations,” Li said. “If we can operate generation well, the asset doesn’t just retain investment value, it gains upside.”

Octopus Venture

The Hangzhou-based company was founded in 2022 and has developed about 3 gigawatts of mostly rooftop solar for large industrial customers. Earlier this year, it formed a joint venture with the UK’s Octopus Energy Group, which will bring in “trading experience from power markets around the world,” Li said.

For decades, China has relied on a top-down approach to its power market, with government setting prices and grid operators deciding which plants generate electricity and when. The system has paid dividends, helping to keep prices stable and coordinate the massive build-out of infrastructure that has underpinned the country’s rapid growth. 

In recent years, Beijing has pivoted to less regulation, part of a broader push under President Xi Jinping to allow market signals to guide the economy. 

Progress has been slow. Last year, more than 60% of power consumption was delivered via private transactions, according to the National Energy Administration. But the vast majority of those were term contracts and not the next-day deals that would more efficiently match supply and demand. 

Short-term trading is showing signs of growth. More than half the country’s provinces now have markets, and 12% of all power transactions were of the spot variety in the first half, the NEA said.

Growth doesn’t automatically mean profits, though. Given China’s size, Li expects thousands of players to enter the market. But only those with the best forecasting abilities and grasp of evolving market rules will succeed. 

“Everyone sees a huge market, but the technical difficulty is extremely high,” Li said. “Maybe only 10% of companies will truly be profitable.”

©2026 Bloomberg L.P.