In 2025, new energy policies were frequently introduced, leaving the industry overwhelmed. At a critical juncture when the entire industry is busy dealing with Document No. 136, the National Development and Reform Commission and the National Energy Administration have issued a significant policy on green power direct connection (the “Notice on Matters Concerning the Orderly Promotion of the Development of Green Power Direct Connection”, hereinafter referred to as the “Notice”), providing policy outline-level support for the industry to explore new application scenarios under the development environment of power marketization.

In fact, before the national policy was introduced, provinces such as Jiangsu and Inner Mongolia had also issued relevant documents on direct green power connection, but there were no clear documents to support the implementation details of direct green power connection. The introduction of this policy has, for the first time, clearly defined the definition of direct green power connection, the proportion of green power, development goals, and cost settlement at the national level.

Although the implementation of green power direct connection is still very challenging in practical operation, the introduction of national-level policies has provided crucial policy support for the next development direction of new energy. Otherwise, green power direct connection would never have made a breakthrough,” an expert familiar with the industry policy trend told Photovoltaic.

From another perspective, as one of the scenarios for the local consumption of new energy, whether green power direct connection has commercial value depends on the specific load situation. Projects with large power consumption and high demand for green power are the most commercially valuable application scenarios for green power direct connection

Green power direct connection, a choice driven by multiple demands

According to the official interpretation of the National Development and Reform Commission, the introduction of the green power direct connection model is mainly based on three reasons: meeting the need for nearby consumption of new energy, users’ green power consumption demands, and providing more options for users to reduce their electricity costs.

Among them, the local consumption of new energy is easier for the industry to understand. For instance, distributed photovoltaic self-generation and self-consumption, as well as integrated source-grid-load-storage, are all typical models of local consumption. Green power direct connection is more similar to a branch field of source-grid-load-storage integration and is a type under constrained conditions.

After communicating with the industry, photovoltaic companies have found that there are many disputes over meeting users’ green electricity demands. Some people think that since green certificates have been integrated with RE100, export enterprises can directly purchase green certificates, so why do they need direct green power connection?

After consulting relevant experts, photovoltaic experts found that in the relevant system of the European Union, Chinese green certificates are not within the scope of recognition. Although the recognition of Chinese green certificates in the EU’s carbon border adjustment mechanism has significantly increased through inter-governmental dialogue mechanisms, as of now, the EU’s Carbon Border Adjustment Mechanism (CBAM) explicitly does not recognize any form of green certificates. It only recognizes direct connection technology between power generation sources and production facilities, or physical power purchase agreements (PPAs) signed between power producers and consumers.

Against this backdrop, in the face of the huge demand for green electricity from export enterprises, direct green electricity connection is undoubtedly one of the best choices. Previously, the introduction of the direct green electricity connection policy in Jiangsu Province was also based on the green energy use demands of foreign trade enterprises. The green power direct connection model, by binding physical consumption with carbon attributes, provides enterprises with a low-cost and highly compliant carbon reduction path, especially suitable for export-oriented and high-energy-consuming industries.

In addition to export-oriented enterprises, major energy consumers are also key participants in the green power direct connection model. Among high energy-consuming enterprises such as electrolytic aluminum, steel, and cement, some have their own thermal power plants. “These enterprises with large electricity loads, by being equipped with wind, solar, and storage facilities, along with some dispatching facilities, can take advantage of the scale effect to reduce electricity prices.

It is reported that an oilfield project in a certain eastern province can achieve an electricity cost of 0.2+ yuan per kilowatt-hour by matching its self-owned power plant with wind and solar power stations, which is much lower than the purchase price of the large power grid.

Can investment risks be taken into account?

After discussing whether the business model is feasible, the next point of concern is the issue of investment risk.

In fact, what is similar to the green power direct connection and distributed photovoltaic and industrial and commercial energy storage models is that if evaluated from the perspective of third-party investment, the user is the greatest uncertainty, such as enterprise bankruptcy or a decline in electricity consumption.

This issue is actually the most headache-inducing one for industry assessment under the third-party investment model. Not only the two methods mentioned above, but also projects such as hydrogen, ammonia and alcohol production from renewable energy and integrated source-grid-load-storage, the uncertainty of electricity demand or the sales of hydrogen, ammonia and alcohol is the most difficult part in investment decisions.

The best way to solve this problem or avoid this risk as much as possible is to bind investment with users. This is also the main reason why the proportion of the self-investment model of industrial and commercial photovoltaic owners in Jiangsu and Zhejiang regions has been increasing in the past two years. On the one hand, these property owners have a genuine need to reduce electricity costs and use green electricity. On the other hand, self-investment by the owners also avoids the uncertainties that third-party investment may face, such as fluctuations in electricity consumption and electricity prices.

Obviously, the national competent authorities have also realized this. The “Notice” proposes that the project’s power sources can be invested in by users, or by new energy power generation enterprises or joint ventures established by both parties. Direct connection dedicated lines should, in principle, be invested in by users and power supply entities. If the project power source and the user are not the same investment entity, a multi-year power purchase agreement or a contract energy management agreement should be signed, and agreements should be signed on matters such as power facility construction, property rights division, operation and maintenance, dispatching and operation, settlement relationship, and liability for breach of contract to avoid unclear rights and responsibilities and effectively safeguard the legitimate rights and interests of the investment entity.

Therefore, the best model for the direct connection of green electricity is actually self-investment by users. Of course, third-party enterprises can also participate in joint ventures to bind users and stabilize investment expectations.

Balance the cost of electricity usage and the distribution of benefits?

From the practical operation perspective of the green power direct connection model, “The biggest resistance to the previous related models’ failure to be promoted actually came from the power grid. This model is equivalent to moving the ‘cake’ of the power grid.” This is a common consensus among those who have participated in the investment of related projects.

Therefore, the release of this green power direct connection document has taken into account the interests of as many parties as possible. To fairly assume the responsibility of power system regulation and social responsibility, and enhance the capacity of public power grids to continuously provide regulation services for the entire power system, the Notice requires that projects pay transmission and distribution fees, system operation costs, policy-based cross-subsidies, government funds and surcharges, etc. in accordance with the relevant regulations of The State Council’s price and finance authorities. Localities are not allowed to reduce or exempt relevant fees in violation of national regulations.

Judging from the feedback, the controversy over the fees required for direct connection to green electricity mentioned above is the greatest. Some industry insiders believe that if all the fees to be paid are the same as those of the large power grid, “the biggest question is whether the electricity price for end users is cheaper or more expensive than that of the power grid?” This is one of the key issues determining whether the business model can work.

Photovoltaic experts consulted relevant experts and learned that “Under the grid-connected mode, it indicates that the electricity consumption of enterprises still needs to be guaranteed by the large power grid. Therefore, the relevant fees for purchasing electricity from the power grid need to be paid as stipulated. However, the backup fee for the part of the electricity directly connected to the green power grid should be reduced somewhat.”

Some industry insiders have pointed out that when green power is directly connected at low voltage, the cost of dedicated lines may be slightly lower than that of long-distance transmission through ultra-high voltage boosting. However, there are also views that the dedicated line fee plus other rigid costs may not necessarily be more cost-effective than purchasing electricity from the large power grid in the end. “Therefore, whether the project can be implemented depends on the specific economic calculation of each project.”
Regarding electricity costs, the official interpretation mentioned that “We should promote green power direct connection projects to tap their own regulation potential, increase the proportion of self-generated and self-consumed new energy, reduce the demand for grid-connected capacity and the electricity obtained from the public power grid, reasonably save electricity energy costs and system regulation costs, and lower the project operation costs.” At the same time, promote the green power direct connection project to participate in the power market as a whole, independently optimize the power generation and consumption curve, and obtain reasonable returns through the trading of power energy and ancillary services under the premise of meeting the proportion requirements of the electricity fed into the grid.

On the other hand, considering the safety of power grid operation, the “Notice” has also imposed many constraints in the detailed rules, including clearly stipulating that large power grids and green power direct connection projects shall respectively fulfill their corresponding safety and supply guarantee responsibilities according to the responsibility interface, as well as putting forward requirements for green power direct connection projects from the aspects of planning, grid connection and operation, giving priority to ensuring the safety of large power grid operation.

In conclusion, as a document that took more than half a year to be released, green power direct connection has indeed brought about a more explosive breakthrough in terms of the system and mechanism. The document also comprehensively considers the interests of multiple parties and is full of details. However, from a business perspective, green power direct connection is not applicable to all scenarios at present. It remains the first choice in high energy consumption, large electricity consumers, high green power demand or weak power grid environments.

The road ahead is long and arduous, but in any case, green power direct connection provides another brand-new track for the next stage of development of China’s new energy, and also explores a path for enterprises with related demands.