CITIC Securities: From Exclusive to Shared, Green Power Direct Connection Enters a New Phase

Background

The article is based on a research report from CITIC Securities, focusing on policy developments in China's green electricity market. It highlights a shift in the "green electricity direct connection" model, which allows power users to directly connect to nearby renewable energy sources, moving beyond exclusive single-user arrangements to a shared, multi-user framework.

Key Points

Policy Evolution: The core shift is from "single-user exclusive enjoyment to cluster-based sharing" for green electricity direct connections. This iteration is explicitly designed to lower the entry barrier for small and medium-sized enterprises (SMEs) to access green power.

Mechanism Innovation: The new policy is built on several key operational mechanisms to improve effectiveness:

• Localized Consumption: Prioritizing the use of renewable energy within the local area where it is generated.
• Source-Load Coordination: Synchronizing the operation of power generation sources with consumer load profiles.
• Traceability and Rights Confirmation: Establishing clear systems to trace the origin of green power and confirm the associated environmental attributes, ensuring credibility for end-users.

Strategic Function: These mechanisms are not just technical improvements; they are recognized as critical institutional innovations. They serve two overarching national goals:

1. Enhancing New Energy Consumption: Solving the challenge of integrating variable renewable energy into the grid.
2. Empowering Industrial Low-Carbon Upgrading: Providing a tangible tool for industries to transition towards lower carbon emissions.

Future Outlook and Drivers: The report posits that multi-user green electricity direct connections will become a vital instrument for several strategic objectives. Its growth is expected to be driven by:

• The rollout of detailed implementation rules by local governments.
• The perfection of supporting regulatory and market mechanisms.
• The continued decrease in energy storage system costs.

Significance

The analysis underscores that this policy model is strategically positioned at the intersection of energy system transformation and industrial decarbonization. By making green power more accessible and verifiable, it directly supports:

• Zero-Carbon Industrial Parks: Providing a scalable and credible renewable energy solution for dedicated economic zones.
• Industrial Low-Carbon Transition: Offering a pathway for manufacturing and other sectors to source clean energy and reduce their carbon footprint.
• New-Type Power System Construction: Facilitating a more decentralized, flexible, and consumption-driven grid architecture through distributed, coordinated generation and load.

In essence, the evolution of green electricity direct connection is framed as a foundational tool that operationalizes high-level national climate and energy policies into market-accessible solutions, particularly for smaller businesses.