How to Read China's Electricity Retail Market: Who Must Buy in the Market, Grid-Company Agency Purchase, Retail Contracts and Packages, Retailer Entry and Collateral, Settlement and Exit, and the 2025 Retail Reforms

Short answer. Since October 2021 every commercial and industrial user in China is meant to buy electricity at market prices: directly in the wholesale market, through a retail company (售电公司), or — by default — through the grid company's agency purchase. The retail market is the second route. Its rules sit in a handful of national texts: the 2021 pricing notice and agency-purchase notice, the 2021 retailer measures, and the 2025 market and settlement rules, plus a 2025 guideline that targets package transparency. This guide reads them as a buyer or investor would.

1. Who is in the market, and the default route

Document 1439 (October 2021) requires all commercial and industrial users to enter the market and abolishes C&I catalogue tariffs: users at 10 kV and above must enter, others as soon as possible. Users not yet buying directly are supplied by grid-company agency purchase, priced mainly through centralised bidding or competitive tender, with at least one month's notice; a user that had been in the market and switches back to agency purchase pays 1.5 times the agency price for other users. Residential and agricultural users stay on catalogue tariffs supplied by the grid company, and localities may not set unreasonable entry thresholds or organise dedicated "special sessions".

The NDRC's agency-purchase notice of the same month fills in the default. Users at 10 kV and above should in principle trade directly (from generators or retailers); others are encouraged to; anyone not trading directly is served by agency purchase, including users who exit the market; and localities should keep narrowing agency purchase. An agency user's price is the agency purchase price (average on-grid price, ancillary costs) plus the transmission and distribution price and government funds; users who left direct trading without good reason, users with captive coal plants and energy-intensive users not trading directly pay 1.5 times the agency purchase price; prices are set monthly and published at least three days ahead. Agency users may opt into direct trading quarterly, and users that sign nothing default to agency purchase. That notice was issued with provisional validity to 31 December 2022; this guide did not retrieve a later national text replacing it.

The 2025 Basic Rules for the medium- and long-term market now frame the choice: a user that participates directly buys all its electricity either in the wholesale market or in the retail market, not both, and an agency-purchase user may choose in the following month to join either.

2. The retail contract and the package

A user may have a retail relationship with only one retail company in a contract period and then buys all its electricity through it; contracts use the month as the minimum unit (a newly registered user's contract takes effect from the actual signing date in that month) and must cover term, volumes and monthly plan, settlement, liability and deviation handling; the retailer bears ancillary-service and congestion costs and keeps the gain or loss. Under the 2025 settlement rules, the trading institution organises the retailer and user to enter the package terms — retail parameters, settlement mode, assessment clauses — on the trading platform to conclude the contract, with changes made monthly. Retail companies must publish on the trading platform all the retail packages they offer, provide their users' demand and load curves to the market operator, post collateral and meet renewable-consumption duties.

CNWattHub editorial method: read a retail offer as three things — the package formula entered on the platform, the deviation clause, and who bears ancillary and congestion costs (the retailer, under the measures).

3. Who may sell, and what they post

The 2021 retailer measures set entry tiers by total assets: at least 20 million yuan; from 20 million up to but not including 100 million yuan, no more than 3 TWh of sales a year; from 100 million up to but not including 200 million, no more than 6 TWh; 200 million yuan and above, no cap; and at least 10 full-time professionals including one senior and three intermediate titled staff. Before trading, a retailer lodges a performance bond or insurance equal to the larger of (1) its past-12-month wholesale volume at no less than 0.8 fen/kWh and (2) the larger of its wholesale and retail volume over the past two months at no less than 5 fen/kWh; spot-market regions may raise the standard.

4. Settlement and exit

A retailer's wholesale and retail positions are settled separately; for a retailer without distribution-network operating rights, its settled amount is the difference between its retail and wholesale settlements; and if it fails to pay, the grid company may draw on its bond, deposit or other collateral. If a retailer is forced out, its unperformed contracts are negotiated within 10 working days, then transferred or auctioned to other retailers; failing that, users may sign with another retailer or are taken over by a default (保底) retailer. A retailer leaving voluntarily must apply 45 working days ahead. For a user, the practical question is which default retailer applies in its province and on what terms.

5. The 2025 reforms: packages and transparency

The NDRC/NEA guideline for regions with continuously operating spot markets (发改能源〔2025〕1171号, 2 September 2025) devotes a section to a "standardised and transparent retail market": an online retail trading platform, study of an ex-ante price-estimation mechanism for retail packages, and signing through platform comparison; improved package templates, with retailers and users encouraged to configure packages flexibly and sign time-of-use contracts, and new products such as green-power retail packages, so wholesale prices pass through to retail; and regular publication of average wholesale and retail prices by market operators. It also tells localities not to organise special sessions, adjust trading results or settled charges improperly, set up imbalance fund pools or allocate unreasonable costs to participants.

6. Scale

The NEA reported that to end-September 2025 cumulative market-traded electricity was 4.92 trillion kWh, up 7.2% and 63.4% of total consumption, with over one million market participants (1.02 million), including 38,000 generators, 977,000 users and 4,640 retail companies. No national figure for the retail market's share of that volume was retrieved.

Route map for a C&I user

Checklist

CNWattHub editorial method, not a sourced rule:

1. Confirm the user's current route (wholesale, retail, agency) and the switching window in its province.
2. Read the package terms entered on the trading platform, not a sales summary, and check time-of-use terms.
3. Check the deviation clause and who bears ancillary and congestion costs.
4. Check the retailer's asset tier against the volume offered, and its collateral position.
5. Identify the default retailer and its terms in case the retailer exits.
6. For green-power needs, ask whether a green-power retail package exists locally.

Scope limits

National texts only; provincial retail rules, package types, price caps and deviation penalties are not described. The 2021 agency-purchase notice carried provisional validity to end-2022 and no replacement text was retrieved. No retailer is named or compared. Not legal, regulatory or investment advice.