China's electricity market trading volume jumped 24.2% year on year in the first half of 2026, far outpacing the growth in both overall power consumption and green power trading, as the expansion of market-based electricity transactions increasingly reflected wider market participation rather than a surge in underlying demand.

In the first half of 2026, nationwide power market trading volume reached 3,684.8 TWh, up 24.2% year on year, according to the China Electricity Council. Green power trading volume, however, rose just 6.6% from a year earlier to 164.1 TWh, a sharp contrast with the broader market's growth.

According to data from the National Energy Administration, in the first half of the year, China's total electricity consumption reached 5,099.9 billion kWh, up 5.3% year on year, which likewise represented a marked gap compared with the 24.2% growth in market-traded electricity.

The gap reflects the fact that the surge in traded electricity was driven primarily by an expanding market-based trading system rather than a sudden surge in end-user demand. Within-province trading expanded rapidly, buoyed by the full market entry of renewable energy and load growth from the digital economy, including AI computing centers and data centers, many of which prioritize local wind and solar generation to lock in power costs.

Green power trading is a specialized form of medium- and long-term power trading, not a parallel market. In the first half of 2025, nationwide green power trading volume rose 49.3% year on year. The slowdown in the first half of 2026 partly reflects a high base effect.

A more direct cause stems from changes in market rules. A policy issued in February 2025 established a "choose one of two" rule for mechanism electricity revenue and green certificate environmental revenue: once electricity is included in the mechanism-based price-difference settlement system, it can no longer be issued tradable green certificates.

Under this constraint, more than 70% of existing wind and solar projects nationwide prioritized including most of their electricity in the mechanism-based settlement system, retaining only a small portion for market-based green power trading, directly squeezing effective supply.

At the same time, some companies opted to purchase lower-priced green certificates to meet green consumption requirements rather than pay a premium for direct green power purchases, further dampening green power trading growth.

The green certificate market is undergoing a price reshaping. According to the National Energy Administration's "China Green Electricity Certificate Development Report (2025)", the average price of electricity green certificates jumped to 5.57 yuan per certificate in 2025 from 0.72 yuan per certificate in 2023 and earlier, and climbed further to 7.76 yuan per certificate in the first quarter of 2026.

China traded 240 million green certificates in the first quarter, up 21.19% year on year. The widening gap between certificate prices and the environmental value premium of green power trading has prompted some companies to purchase certificates separately to meet green consumption accounting requirements.

This structural shift means the slowdown in green power trading growth does not reflect shrinking demand for green consumption, but rather a diversification of how green value is realized, moving from a single green power trading channel toward a "separation of power and certificates" model.

Green power trading is not cooling indefinitely. National Energy Administration data show that in June 2026 alone, green power trading rose 15.0% year on year, outpacing the cumulative first-half growth rate. Hourly green power trading has been successfully piloted in multiple provinces, and the national unified power market system is advancing from initial establishment toward full completion.

The National Energy Administration is working to expand green power applications on three fronts: boosting green power consumption demand, advancing full coverage of green certificate issuance, and promoting power-carbon-certificate linkage. It has also officially launched a China green certificate price index.

Over the longer term, the demand foundation for green power trading remains intact. In June 2026, the National Development and Reform Commission and three other departments jointly issued Order No. 42, a policy setting minimum renewable energy consumption targets and renewable power absorption responsibility weights, effective August 1, 2026.

The rules impose green power consumption ratio requirements on electrolytic aluminum, steel, cement, polysilicon and new data centers at national hub nodes. Companies that fail to meet targets must make up the shortfall through green certificate trading within three months of target publication, or face regulatory talks, public notices and inclusion in credit records.

Industry estimates suggest that independent green certificate demand from these key sectors alone will grow from 910 million certificates in 2026 to 1.77 billion by 2030, an average annual growth rate of more than 20%. The short-term fluctuation in green power trading growth therefore reflects the adjustment rhythm of market mechanisms during a transition period, rather than a reversal of the long-term trend.