China’s rapid renewable expansion coincides with deep structural reforms to its power markets. Over the past decade, reform has drawn on international market design experience while making substantial institutional progress since 2015. Unlike developed markets adapting established frameworks to accommodate renewables, China must address high-renewable integration alongside conventional market liberalisation challenges. High renewable penetration creates several shared analytical challenges, including revenue adequacy under near-zero marginal costs, intensified price volatility, limited participation by emerging flexible resources, incomplete markets for new system attributes, and ambiguous planning–market interactions. In China, responses to these challenges are shaped by two foundational drivers: (1) using the market as an instrument of government policy and (2) hierarchical prioritisation of end-user price stability and socio-political acceptability of reform over allocative efficiency. These drivers have produced a reform pathway characterised by strict price control, technology specific participation rules, and planning led adequacy coordination. Provincial pilots implement variants of this pathway iteratively, while international experience provides comparative reference points. The review concludes that power systems worldwide combine wholesale markets with broader planning and system operator governance, although the balance and institutional form differ substantially across jurisdictions. China’s reform occupies a distinct position on this continuum, warranting evaluation frameworks suited to layered market–administrative coordination and sector coupled net zero transitions. The principal implication is not that China will converge towards a single internationally recognised market template, but that reforms are likely to maintain structured divergence rooted in China’s political economy while remaining part of the broader shift towards hybrid governance everywhere.
Recommended citation:
Dong, J., Zhang, Z., Davidson, M. R., Shi, M., Jiang, N., Zhang, N., Kang, C., Pollitt, M. G., & Guo, H. (2027). China’s power market reform for a high-renewable future: Key drivers, market design, and prospects. Renewable and Sustainable Energy Reviews, 244, 117475. https://doi.org/10.1016/j.rser.2026.117475