How to Read China's Coal Power Capacity Pricing: The 2021 Energy-Price Band, the 330 元/kW·yr Base and the 100/165 Provincial Table, the Deduction Rules, the 2026 Increase and Floor Change, and the Flexibility and Carbon Indicators in the 2024–2025 Coal Plans

Short answer. A Chinese coal unit is paid in two parts. The energy part is formed in the market inside a 'benchmark plus float' band set in 2021. The capacity part, since January 2024, is a share of a nationally uniform fixed cost of 330 元/kW·yr: 100 元/kW·yr in most provincial grids and 165 元 in seven for 2024–2025, rising to at least 50% (165 元) everywhere from 2026 and in principle to at least 70% in places such as Yunnan and Sichuan. The fee is deducted when the unit cannot deliver its declared maximum output, and it is paid only to compliant public units that meet national efficiency, environmental and flexibility requirements. The January 2026 notice raises the recovery share, lets provinces move the medium- and long-term price floor off the uniform 20%-below-benchmark line, and provides for reliable-capacity compensation to be established in due course after spot markets run continuously, at which point the capacity price for the units concerned ends. This guide follows that stack document by document; the companion guide on capacity compensation covers the cross-technology mechanism.

1. The energy price band (2021)

发改价格〔2021〕1439号 (11 October 2021, effective 15 October 2021) moved in principle all coal-fired generation into the market, with on-grid prices formed by trading within a 'benchmark price plus float' band widened to no more than 20% up or down in principle (previously up 10%, down 15%); energy-intensive enterprises are not bound by the 20% upward limit, spot prices are not bound by the band, and the benchmark remains the reference for new-energy pricing. The same notice already called for exploring a market-based capacity compensation mechanism alongside spot and ancillary-service markets.

2. The capacity price (2023)

Who gets it. 发改价格〔2023〕1501号 applies the coal capacity price to compliant public coal units in operation; captive coal plants, units outside national plans and units not meeting national energy-efficiency, environmental and flexibility requirements do not receive it, with details to be set by the NEA.

How much. The capacity price recovers a share of a nationally uniform fixed cost of 330 元/kW·yr — about 30% in most places in 2024–2025, about 50% where coal power's role shifted faster, and at least 50% everywhere from 2026. The fee is set by the local price and the unit's declared maximum output, declared and settled monthly, applies to new units from the month after commissioning, and is recovered through system operation fees shared by industrial and commercial users in proportion to monthly consumption. The annex table lists 2024–2025 provincial-grid prices (元/kW·yr, tax inclusive) of 100 for most grids and 165 for 河南, 湖南, 重庆, 四川, 青海, 云南 and 广西, and notes that from 2026 the recovery share rises in principle to at least 70% in places where coal's transition is faster, such as 云南 and 四川, and to at least 50% elsewhere. CNWattHub arithmetic on the 330 元 base: 30% ≈ 99 元, 50% = 165 元 and 70% = 231 元/kW·yr; the Q&A states 100 元 for 'about 30%' and 165 元 for the 50% floor, and no source quotes a 2026 price for any province.

How it is lost. A unit in normal operation that cannot provide its declared maximum output on dispatch instruction (cross-provincial exports per contract) loses 10% of the month's capacity fee after two occurrences in the month, 50% after three and 100% after four or more; a unit whose monthly fee is fully deducted three times in a calendar year loses eligibility; the NEA sets the declaration, recognition and assessment rules.

Why. In the NDRC's November 2023 Q&A, the official explained that China had applied a single energy-only price to coal so that units recovered costs only by generating, that mature markets typically use two-part tariffs where the capacity price recovers fixed cost and the energy price variable cost, that 'about 30%' means 100 元/kW·yr and the 2026 floor of 50% means 165 元/kW·yr, and that residential and agricultural users are not involved.

3. The 2026 notice

发改价格〔2026〕114号 (27 January 2026) requires provinces to raise coal capacity recovery to at least 50% of fixed cost under 1501号 and lets them go higher according to local market development and coal utilisation hours. After that, provinces may adjust the in-province coal medium- and long-term price floor, relax coal contract-ratio requirements where power and energy balance is assured, must not force fixed-price contracts, and may require a share of annual contract volume at flexible prices reflecting real-time supply and demand. In the January 2026 Q&A, the NDRC and NEA officials described capacity prices as a 'basic wage' (保底工资) arrangement so that regulating sources generate at peaks and give way to new energy at other times, and said that because the higher capacity price lowers the cost coal must recover from the energy market, provinces may adjust the coal medium- and long-term floor and no longer uniformly apply a floor 20% below the benchmark.

The notice also provides that after a province's spot market runs continuously, the provincial price authority establishes reliable-capacity compensation in due course (适时) on uniform principles, that the scope may include coal, gas and qualifying grid-side independent storage participating in the local market on their own initiative, and that once the compensation mechanism is established the units concerned no longer receive the previous capacity price. The September 2025 guideline for spot regions (发改能源〔2025〕1171号) proposes a reliable-capacity assessment that assigns capacity coefficients to each unit type and to new-type storage from output characteristics, auxiliary consumption and maintenance outages, and a compensation mechanism for all source types set by provincial price authorities on the principle of basically recovering the marginal unit's fixed cost after energy and ancillary-service revenue. CNWattHub reading: for a coal unit, the capacity price is therefore a transitional instrument; its end is tied to the province actually establishing the compensation mechanism, for which continuous spot operation is the precondition, not a fixed date.

4. The flexibility and carbon indicators

1501号 withholds the capacity price from units that fail national energy-efficiency, environmental and flexibility requirements, with details left to the NEA. Those detailed rules were not retrieved for this guide. Two later plans retrieved for this guide set national indicators for coal flexibility and carbon; CNWattHub reading: they are indicators of the kind 1501号 refers to, but none of the retrieved sources states that they are the eligibility test.

Flexibility and reliability. The 2025–2027 new-generation coal upgrade plan (发改能源〔2025〕363号, 26 March 2025) sets technical indicators: existing units' minimum output of 25%–40% of rated load, new bituminous pulverised-coal units striving for 25% or lower under pure-condensing conditions, pilot units below 20%; ramp rates of 0.8%–2.5% of rated power per minute for existing units; in supply-security periods, a declared-output attainment rate of at least 98% (99% for pilots) and no more than 0.3 unplanned outages per unit-year — the outage figure being, per the plan's note, a statistical average over one major-overhaul cycle that excludes the first three years after commissioning and excludes CFB, W-flame and fan-mill units; and a 10%–20% carbon-intensity reduction for pilot units versus 2024 comparable units. CNWattHub reading: declared output is also the quantity the 1501 deduction rule measures, so the two documents are usefully read together.

Carbon. The 2024–2027 coal low-carbon transformation action plan (发改环资〔2024〕894号) targets project-level carbon intensity about 20% below the 2023 average of comparable coal units by 2025 and about 50% below (approaching gas-fired levels) by 2027, through three routes: biomass co-firing (capability of 10% or more), green-ammonia co-firing (10% or more) and carbon capture, utilisation and storage.

Reading table

Checklist

CNWattHub editorial method, not a sourced rule:

1. Confirm the unit is a compliant public unit within national plans and meets the energy, environmental and flexibility requirements.
2. Read the provincial grid's 2024–2025 price from the 1501 annex and ask the provincial price authority for the 2026 level (at least 165 元; at least 231 元 in principle where the 70% note applies).
3. Model declared maximum output conservatively; the deduction schedule is steep and three full deductions end eligibility.
4. Check the province's medium- and long-term floor after 114号; it may no longer be 20% below the benchmark.
5. Ask whether the province's spot market runs continuously and whether it has established reliable-capacity compensation, which is what replaces the capacity price.
6. For retrofit decisions, map the unit against the 363号 flexibility indicators and the 894号 carbon routes, and ask the NEA's detailed eligibility rules separately.

Scope limits

National texts, the 1501 annex and two regulator Q&As only. No provincial 2026 capacity price, no settled capacity-fee total and no NEA declared-output assessment rule is quoted. Not legal, regulatory or investment advice.