How to Read China's Pumped Storage Pricing: The Two-Part Tariff of Document 633, the 48 Approved Capacity Prices of 2023, How Projects Are Planned and Approved, and What the 2026 Capacity-Price Notice Changes

Short answer. A Chinese pumped-storage station earns two things: an energy price that is meant to be formed competitively and covers pumping and generating costs, and a government-approved capacity price through which it recovers its other costs and earns a reasonable return, paid by the grid company and passed to users through the provincial transmission tariff. In 2023 the NDRC approved capacity prices for 48 stations, listed in a table that runs from 289.73 to 823.34 元/kW. In January 2026 the NDRC and NEA changed the rules for new stations: those that started construction after Document 633 (April 2021) will get one provincial capacity price set every three to five years on an average-cost basis, take part on their own (自主参与) in energy, ancillary-service and other markets, and share market gains with users; and provinces may move them onto a reliable-capacity compensation mechanism instead. This guide reads the five national texts that set these rules and the plan and statistics behind them.

1. The two-part tariff (Document 633, 2021)

发改价格〔2021〕633号 (30 April 2021) keeps a two-part tariff. The energy price, formed competitively, reflects the value of peak regulation and recovers the operating costs of pumping and generating. The capacity price, approved by government, reflects frequency regulation, voltage regulation, system reserve and black-start value; through it the station recovers its costs other than pumping and generating operating costs and earns a reasonable return; the corresponding capacity fee — capacity price × unit capacity — is paid by the grid company and recovered through the provincial transmission-and-distribution tariff. Where no spot market operates, pumping electricity may be supplied by the grid company at 75% of the coal-fired benchmark price (or at a tender price), and station output is bought at the benchmark price. The capacity price is set by the operating-period method and adjusted with the provincial transmission-tariff regulatory period; a station that missed its availability target in the previous period gets a lower price. The document also foresaw gradually reducing the share of design capacity covered by the approved price so that stations recover costs mainly through the market. Market gains are shared: of gains from ancillary-service markets or compensation and from pumping and on-grid tariffs in the previous regulatory period, 20% stays with the station and 80% is deducted when the next period's capacity price is set; losses are the station's.

The 633 annex that sets the return and depreciation parameters is not in the copy retrieved for this guide, so no rate of return or operating-period length is quoted here.

2. The 48 approved prices (Document 533, 2023)

发改价格〔2023〕533号 (11 May 2023) approved capacity prices for 48 stations in operation or due to be commissioned by end-2025, effective 1 June 2023. Grid companies must sign and publish annual dispatch agreements with the stations, settle capacity fees monthly, and report the previous year's price execution and availability to the NDRC Price Department by the end of May each year. The attached table gives each station's capacity (万千瓦) and capacity price (元/千瓦, VAT-inclusive). Among the 48 entries the values run from 289.73 元/kW (潘家口, Hebei, 27万千瓦) to 823.34 元/kW (响洪甸, Anhui, 8万千瓦); examples include 丰宁一期 at 547.07 and 丰宁二期 at 510.94 (Hebei, 180万千瓦 each) and 阳江一期 at 643.98 (Guangdong, 120万千瓦); the Hebei 岗南 mixed station keeps its existing approved price. CNWattHub arithmetic on the table, using Document 633's definition of the capacity fee as capacity price × unit capacity: at 547.07 元/kW, a 180万千瓦 station's capacity fee is about 9.85 亿元 at that price.

CNWattHub editorial method: the table is the only public, station-by-station list of pumped-storage capacity prices in the sources used here; a project pitch that quotes "the national capacity price" should be checked against the row for the specific station or, for new stations, against the provincial price described in section 4.

3. How much is being built and how it is approved

The NEA's release on the Pumped Storage Medium- and Long-Term Development Plan (2021–2035) says the key-implementation project library totals 421 GW (4.21亿千瓦) and the reserve library 305 GW; the plan targets at least 62 GW in operation by 2025 (double the 13th Five-Year level), about 120 GW by 2030 and a modern industry by 2035; it calls for determining investors by tender or competitive bidding and encourages private capital. By end-2024, according to the NEA's February 2025 Q&A, pumped storage in operation exceeded 58 GW (5800万千瓦) with utilisation hours rising steadily; the Energy Law in force from January 2025 requires reasonable layout and active, orderly development.

The 2025 interim measures on development and construction say projects are generally divided into those serving the power system and those serving specific power sources. Provincial layout must weigh construction cost and tariff affordability; investors are selected by tender or other competitive means with no mandatory industry bundling or local-investment preconditions; projects are evaluated before approval with strict cost control; the approval must state capacity and investment and seek the provincial price authority's opinion; the measures are valid for five years. CNWattHub editorial method: the price authority's involvement at approval is the point at which a new station's future capacity price is first constrained, so the approval document is worth reading alongside the tariff texts.

4. What the 2026 notice changes

发改价格〔2026〕114号 (27 January 2026) splits pumped storage by start date. Stations that started construction before Document 633 — defined as having obtained the water-abstraction, temporary land-use and EIA approval documents — keep government-set capacity prices approved or checked by the provincial price authority under the 633 method, and are re-priced after the operating period to cover necessary upgrades and O&M. For stations started after 633, the provincial price authority sets, every three to five years, a single capacity price for all stations of the same period on the provincial grid, on the principle of covering average cost over the operating period using 633's cost parameters, reduced for stations whose full-power generation duration is under six hours. These stations take part on their own in energy, ancillary-service and other markets (自主参与电能量、辅助服务等市场); a provincially set share of market gains stays with the station and the rest offsets system operation fees for users. In the accompanying Q&A, the officials said the existing mechanism gave insufficient cost discipline and described the new arrangement as "one price per province" (一省一价).

The notice also opens a second route. Reliable-capacity compensation may gradually be extended to pumped storage; provinces with a fairly complete market may apply it to stations started after this notice, which then take part in the energy and ancillary markets and keep all market revenue; stations started after 633 are encouraged to opt in voluntarily; government-priced units receive no compensation.

Settlement rules follow. Capacity fees and reliable-capacity compensation go into local system operation fees. Where the spot market runs continuously, pumping and generation are priced by market rules or spot real-time prices; elsewhere the pumping price is the grid agency purchase price for industrial and commercial users, and the way the generation price is formed is set by the provincial price authority. When pumping, a station is treated as a user: it pays the on-grid line-loss charge and system operation fees and, provisionally, the single-part-user transmission-and-distribution tariff, and transmission-and-distribution charges are refunded on the volumes it generates; shared market gains are settled monthly and cleared annually; for stations shared by several provinces, the capacity fee is split by the capacity allocation ratio. Provinces must also set up a user affordability assessment, whose results are an important basis for compensation standards, regulating-capacity and storage plans and the approval of pumped-storage projects; regions with ample reliable capacity or weak affordability must strictly control new regulating sources, and a project without an affordability assessment may not be planned, approved or paid capacity fees or compensation.

One accounting point: in the 2025 pricing package (发改价格规〔2025〕1490号), the cost review measures exclude pumped-storage stations' costs from grid companies' transmission-and-distribution costs, and the provincial grid pricing measures exclude pumped-storage assets from the fixed assets that may earn a return. The capacity fee therefore reaches users as a pass-through charge, not as part of the grid company's own regulated cost base.

Reading table

Checklist

CNWattHub editorial method, not a sourced rule:

1. Establish the station's construction start date relative to 30 April 2021 (Document 633) and 27 January 2026 (Document 114); the date decides which pricing route applies.
2. For an operating station, find its row in the 533 table and ask for the availability record, since the price can be lowered for missed availability.
3. For a post-633 station, ask the provincial price authority's unified price, its review cycle and the gain-sharing ratio.
4. Check whether the station's full-power generation duration is below six hours, which triggers a price reduction.
5. Ask whether the province has done the user affordability assessment, without which a project cannot be approved or paid.

Scope limits

National texts, one NEA plan release and one NEA statistic only. No province's unified post-633 price, no station-level availability or utilisation data, and no return or depreciation parameters from the 633 annex are quoted. The 2021–2035 plan is cited from the NEA release, not the plan text. Not legal, regulatory or investment advice.