- China targets 25% non-fossil energy share and 3,500 GW renewable capacity by 2030.
- Massive scale up of storage to 300 GW and pumped hydro to 160 GW to stabilise grid.
- Power pricing reforms to expose industry to volatile spot markets and real time tariffs.
China has unveiled its 15th Five Year Plan for building a new energy system for the period 2026 to 2030, signalling a decisive shift from rapid capacity expansion to system optimisation, grid flexibility and market driven pricing.
Issued jointly by the National Development and Reform Commission and the National Energy Administration, the plan sets binding targets to accelerate the transition to a low carbon power system while maintaining energy security.
By 2030, non-fossil sources are expected to account for 25% of total energy consumption, with renewable energy consumption reaching 1.8 billion tonnes of standard coal equivalent. Total installed renewable capacity is projected to hit around 3,500 GW, including more than 2,800 GW from wind and solar.
A central pillar of the strategy is grid flexibility. China plans to increase new type energy storage capacity more than fourfold to 300 GW, alongside expansion of pumped hydro storage to 160 GW. Virtual power plants and vehicle to grid systems will each scale to 50 GW, while grid infrastructure will be upgraded to integrate up to 900 GW of distributed energy.
Despite the strong push toward renewables, coal will retain a role as a system stabiliser, described as a bottom line guarantee for energy security. At the same time, China will strengthen domestic supply chains for clean energy technologies and critical minerals.
The plan also prioritises electrification and green hydrogen, with output targeted to reach 2.5 million tonnes by 2030, supporting the shift away from oil in transport and industry.
Alongside infrastructure expansion, China is accelerating power market reforms that will fundamentally reshape electricity pricing. Fixed tariffs for industrial and commercial users are being phased out across more than 11 provinces, exposing businesses to wholesale market dynamics and price volatility.
The growth of day ahead and real time spot markets is expected to introduce significant intraday price swings. High solar output during daylight hours is likely to push prices sharply down, in some cases to zero or negative levels, while evening demand peaks will drive price spikes.
Renewable energy projects are also being integrated into competitive power markets, ending the era of guaranteed pricing. Developers are increasingly relying on multiyear power purchase agreements and flexible contracts to manage revenue risk.
To support system stability, new pricing mechanisms will reward storage, pumped hydro and virtual power plant operators for providing balancing services. However, the cost of maintaining grid stability is increasingly being passed through to end users.
The reforms also aim to unify China’s fragmented regional power markets by strengthening inter provincial trading. This will enable renewable energy generated in western regions to be transmitted and competitively priced in high demand eastern provinces, improving overall system efficiency.
Author: Bryan Groenendaal
