On May 21st, the National Development and Reform Commission and the National Energy Administration issued the “Notice on Matters Concerning the Orderly Promotion of Green Power Direct Connection Development”, exploring and innovating the integrated development model of new energy production and consumption, and promoting the local and nearby consumption of new energy.

According to the document, the green power direct connection referred to in this article means that new energy sources such as wind power, solar power generation and biomass power generation are not directly connected to the public power grid, but supply green power to a single power user through direct connection lines, which can achieve a clear physical traceability of the supplied electricity.

Direct connection lines refer to dedicated power lines that directly connect power sources to power users. It is classified into two types according to whether the load is connected to the public power grid: grid-connected type and off-grid type. Among them, grid-connected projects are integrated into the public power grid as a whole, forming a clear physical interface and responsibility interface with the public power grid. The power source should be connected to the user side of the property rights demarcation point between the user and the public power grid.

It should be noted that there are separate regulations for the direct supply of green electricity to multiple users through direct connection lines. Distributed photovoltaic power sources shall be implemented in accordance with policies such as the “Administrative Measures for the Development and Construction of Distributed Photovoltaic Power Generation”.

Project scope: New energy projects can be built in conjunction with the newly added load. Under the premise that the existing coal-fired and gas-fired self-owned power plants have fully paid the renewable energy development fund, the existing load will be directly connected to green electricity. Export-oriented enterprises with rigid demands for carbon reduction can make full use of the surrounding new energy resources to carry out direct green power connection for their existing loads. Projects that are unable to be connected to the grid due to grid connection or consumption restrictions can have their green power direct connection carried out after changing the procedures.

In addition, the scale of wind power and solar power generation is included in the new energy power generation development and construction plan formulated by the provincial energy administrative department.

Encouraged model: In principle, for green power direct connection projects, the load shall be the main responsible entity. The power source can be invested in by the load, or by the power generation enterprise or the joint venture company established by both parties. For those who are not the same investment entity, a multi-year power purchase agreement or a contract energy management agreement should be signed to clearly define property rights, settlement, responsibilities and other divisions.

The specific proportion: The project should follow the principle of “determining the source based on the load”. The proportion of the project’s overall annual self-generated and self-consumed new energy power to the total available power generation should be no less than 60%, and the proportion to the total power consumption should be no less than 30%. The proportion of self-generated and self-consumed power should be continuously increased, and it should not be less than 35% before 2030.

The upper limit of the proportion of grid-connected electricity to the total available power generation shall be determined by the energy authorities of each provincial level in light of actual conditions, and generally shall not exceed 20%.

In terms of costs: Green power direct connection projects should 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 financial authorities. All localities shall not reduce or exempt relevant fees in violation of national regulations.

Electricity market: To participate in the electricity market transactions as a whole, production is arranged based on the market transaction results, and settlement is made according to the exchange power with the public power grid. The project load shall not be purchased for electricity on behalf of the power grid enterprise.

Responsibility division: Grid-connected green power direct connection projects and the public power grid form a clear and definite safety responsibility interface based on the property rights demarcation point. The project should comprehensively consider factors such as internal source-load characteristics, balancing capacity, economic benefits, and power exchange with the public power grid, independently and reasonably declare the grid-connected capacity, and negotiate with the power grid enterprise to determine the power supply responsibilities and costs beyond the grid-connected capacity.