National Development and Reform Commission: A Stricter Tiered Electricity Pricing System for the Electrolytic Aluminum Industry Will Be Implemented

On September 16, at the National Development and Reform Commission’s (NDRC) press conference for September, Peng Shaozong, Deputy Director-General and First-Level Inspector of the NDRC’s Price Department, stated that, in accordance with the decisions and arrangements

On September 16, at the National Development and Reform Commission’s (NDRC) press conference for September, Peng Shaozong, Deputy Director-General and First-Level Inspector of the NDRC’s Price Department, stated that, in accordance with the decisions and arrangements of the Party Central Committee and the State Council, the NDRC has since the beginning of this year accelerated electricity-price reform by introducing innovative pricing mechanisms for pumped-storage hydropower, issuing policies to enable new-energy power to connect to the grid at parity prices, optimizing time-of-use pricing for peak and off-peak periods, and implementing a more stringent tiered electricity-pricing system for the electrolytic-aluminum industry. The introduction of these four key reform measures has garnered widespread attention and positive appraisal from all sectors.

 

First, we will innovate the pricing mechanism for pumped-storage hydropower. Specifically, we will establish electricity prices for pumped-storage generation through competitive bidding, incorporate capacity charges into transmission and distribution tariffs for recovery, and strengthen alignment with the development of the electricity market. This will send a clear and robust price signal, reassure investors, and provide strong impetus for the accelerated development of pumped-storage hydropower.

 

Second, a policy has been introduced to enable new energy sources to achieve grid parity. It clarifies that, starting this year, newly built wind and photovoltaic power projects will enter the grid-parity phase, with this year’s benchmark coal-fired power prices serving as the pricing reference. This measure will ensure satisfactory returns for new projects and strongly accelerate the development of the new-energy industry.

 

Third, the time-of-use electricity pricing mechanism will be optimized. In regions where the peak-to-valley difference in the power system exceeds 40%, the ratio of peak-period to off-peak-period electricity prices shall, in principle, be no lower than 4:1. In addition, all localities are required to establish a super-peak pricing mechanism, under which super-peak prices will be set at an additional 20% above the peak-period rates. This approach will fully leverage the signaling function of electricity prices to encourage power consumers to shift their demand from peak to off-peak periods, facilitate the integration of new energy sources, and promote the broader development of energy storage. As a result, it will play a crucial role in ensuring a stable power supply during peak demand periods and enhancing the overall efficiency of the power system.

 

 

Fourth, a stricter tiered electricity pricing system will be implemented for the electrolytic aluminum industry. By 2025, energy efficiency requirements for the industry will be raised in three phases, and electricity tariffs for enterprises that fail to meet these standards will be progressively increased. This sends a clear warning signal to the electrolytic aluminum sector—a high-energy-consuming industry with annual electricity consumption exceeding 500 billion kilowatt-hours—and will continuously incentivize firms to improve energy efficiency, enhance productivity, and reduce carbon emissions.

 

Going forward, the National Development and Reform Commission will thoroughly implement the Party Central Committee and the State Council’s directives on peaking carbon emissions and achieving carbon neutrality, with a focus on building a new type of power system dominated by new energy sources, and will continue to deepen electricity pricing reform. The Action Plan for Deepening Price Mechanism Reform during the 14th Five-Year Plan period, issued in the first half of the year, has already laid out the overall framework for electricity pricing reform over the coming period. Recently, the draft Measures for Determining Transmission Tariffs for New Inter-Provincial and Inter-Regional Projects has completed the public consultation process and is slated for promulgation shortly. In addition, we are accelerating research on measures to improve the green electricity pricing system, refine the mechanism for setting nuclear power prices, and further deepen the reform of catalog-based retail electricity tariffs. We will promptly formulate and implement these policies to better leverage the signaling and regulatory functions of electricity prices, optimize the allocation of power resources, and support the transition toward green and low-carbon development.

 

 

—— Reprinted from “Henan Nonferrous Metals Brief, Issue 9”