Traders Will Get Access to $500 Billion China Power Market

This article first appeared on the BNEF mobile app and the Bloomberg Terminal.

  • China commercial, industrial power use more than all of U.S.
  • China State Grid Corporation controls 70 percent of market

Potential size of China electricity spot market vs. U.S.

Source: Bloomberg New Energy Finance, China Electricity Council

China’s power market deregulation opens up retail electricity sales worth $0.5 trillion, to new non-grid companies. In a recent announcement, regulators indicated that spot markets will launch by 2018, and that new retail power companies can trade electricity directly with each other, rather than sell to the final customer. This implies that pure financial traders can participate in the market without owning any generation and grid assets or having a direct commercial or industrial customer base. These policies open up the possibility for high frequency power trading and set the foundations for derivative markets.

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