The recent policy announcement by the National Development and Reform Commission marks a significant step toward transforming the power grid system and potentially breaking down the long-standing grid monopoly. The Interim Measures for the Administration of Distributed Generation, released on August 13, outline detailed procedures for project construction, grid connection, and operational management. Industry experts believe this could be a game-changer, but challenges remain in terms of implementation and rule refinement.
According to the new measures, enterprises, energy service companies, and even individuals are encouraged to invest in distributed generation projects without needing a power generation license. This includes small hydropower stations with a capacity of up to 50,000 kW, as well as renewable sources like wind, solar, biomass, geothermal, and ocean energy. Other forms of waste power generation, multi-energy complementary systems, and gas-based power generation are also included. The goal is to promote decentralized energy production and increase the use of clean energy at the local level.
A key principle outlined in the Measures is "mainly self-use, excess power on-grid, and grid adjustment for shortages." It also introduces a two-way settlement mechanism, either monthly billing or net metering, taking into account peak and valley electricity price differences. Grid companies are required to prioritize the purchase of surplus power from distributed generation projects, ensuring fair compensation for producers.
Compared to earlier drafts, the latest version has improved the settlement period, changing it from "no more than three months" to "principle monthly billing." This change is seen as a positive move to encourage participation from both businesses and individuals, as it reduces concerns over delayed payments.
Additionally, the Measures clarify the responsibilities of grid companies, including managing grid access, investing in necessary infrastructure upgrades, and providing efficient services for distributed generation projects. They are also required to establish clear procedures for connecting to the grid and ensure transparency by publishing contact information for investors.
Despite these positive steps, challenges remain. Experts like Lin Boqiang point out that while the policy is significant, the rules still need further refinement. Implementation could be complex due to existing market structures and the lack of full separation between transmission and distribution. Moreover, the high cost of purchasing distributed power may discourage grid companies from fully supporting these projects.
Qian Jing, Global Brand Director at Jin Jing, remains optimistic, noting that the policy demonstrates a strong commitment to promoting distributed photovoltaic power generation. However, she suggests that support policies need to be more detailed to address the different needs of commercial and individual projects. She emphasizes that focusing on industrial, government, and public sector projects first would be more effective before expanding to residential applications.
Ultimately, the success of distributed generation will depend on establishing a mature business model where all stakeholders—consumers, producers, investors, and manufacturers—benefit and share responsibility for sustainable energy development. Until then, the road to widespread adoption will remain challenging.
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