Policy Signals Clear: Green Power Direct Connection Enters the ‘Mainstream’

In May 2025, the National Development and Reform Commission and the National Energy Administration jointly issued the ‘Notice on Matters Concerning the Orderly Promotion of Green Power Direct Connection Development’. The significance of this document is straightforward yet pivotal – green power direct connection is no longer an exploratory approach but has been formally incorporated into the national energy system design.

In other words, this is not a newly ‘invented’ concept, but a long-standing demand that has finally been recognised, regulated, and permitted for scaled development by policy.

From ‘Over-the-Wall Power Sales’ to ‘Direct Grid Connection’: Not an Upgrade, but a Shift in Track

Prior to this, a practice known as ‘over-the-wall power sales’ had gained popularity within industrial parks.

Generation and consumption sites located within the same park or adjacent plots would connect directly via a single cable, bypassing the public grid. This approach, favoured for its simplicity and cost-effectiveness, was widely adopted in areas with dense distributed photovoltaic installations.

However, its shortcomings were equally apparent:

Unclear boundaries of electricity ownership

Ambiguous responsibilities for grid access fees and dispatch

Grid operators bearing risks without commensurate influence

Persistent regulatory uncertainty

Consequently, wall-to-wall electricity sales functioned more as a tacitly tolerated stopgap arrangement.

Green electricity direct connection fundamentally institutionalises this demand.

Policy documents establish several ‘hard rules’:

Clear boundaries: Direct connection projects must have physically demarcated interfaces with the public grid

Market participation: Projects may participate as a whole in electricity markets, with controlled surplus feed-in ratios (≤20%)

Diverse participants: Generation is no longer restricted to state-owned enterprises, while consumers gain greater control

Balancing mechanisms: Permits use of energy storage and load management to stabilise fluctuations

In essence: The state has granted direct green power connections legal standing while defining clear boundaries.

Explained plainly: What problem does direct green power connection actually solve?

Consider this real-world scenario:

You are a renewable energy or materials company exporting to Europe. Your customer’s contract explicitly requires production to use verifiable green electricity.

But here’s the problem:

When you purchase electricity from the grid, is it wind, solar, or coal-fired? No one can say for certain.

The significance of direct green power connection lies in ‘verifiability’.

Through dedicated lines, electricity from renewable power stations is transmitted point-to-point to the consumer enterprise without entering the public grid, enabling physical traceability.

The enterprise can unequivocally demonstrate to clients, regulators, and certification bodies:

The electricity consumed by this factory originates from a specific wind farm or photovoltaic base.

This is not merely ‘paper green’ but the physical use of green electricity.

Core distinction: Walled-off sales compete on price; direct green connections compete on identity

Comparing the two models reveals fundamentally different objectives:

Walled-off sales: Core focus is lower electricity prices

Direct green connections: Core focus is ‘globally recognised green credentials’

In domestic markets, this difference may be merely icing on the cake;

In international trade, it often determines whether hefty carbon taxes apply.

For industries such as photovoltaics, power batteries, new materials, and chemicals,

this transcends cost optimisation—it determines ‘whether they can enter overseas markets’.

Dual value unlocked: not merely cost reduction, but value enhancement

For electricity consumers: a ‘green identity card’

As CBAM (EU Carbon Border Adjustment Mechanism) and the new Battery Law progressively take effect,

enterprises unable to demonstrate green electricity usage will be deemed high-carbon producers by default.

Green electricity direct connection + long-term power purchase agreements (PPAs) deliver more than:

Verifiable proof of green electricity usage

More stable, predictable electricity costs

They confer compliance capability and international market access.

For renewable energy investors: Securing long-term, stable premium demand

The pain point for traditional renewable projects is:

‘Electricity is generated, but who will buy it and at what price remains uncertain.’

Under direct connection, the electricity consumer itself becomes the long-term buyer,

with prices typically exceeding standard grid feed-in tariffs, as enterprises are willing to pay a premium for ‘green certainty’.

This shifts the focus for renewable projects from ‘gambling on grid acceptance’ to ‘securing customers’.

For the entire system: Synergistic evolution of generation-grid-load-storage

Green power direct connection does not ‘bypass the grid’, but rather alleviates grid fluctuation pressures:

Renewables consumed locally

Energy storage smooths output

User side gains stable power supply

Grid side reduces peak-shaving burden

It represents a trend:

The energy system shifting from ‘generation-centric’ to ‘user-centric’.

Why is it ‘profitable’? Three revenue streams converge

Green power direct connection is not a policy subsidy but a clear business model:

1. Electricity cost optimisation

Through dedicated lines and long-term agreements, it reduces ancillary costs and makes electricity pricing more controllable.

2. Carbon Premium

Green electricity attributes directly offset carbon taxes and enhance ESG ratings, offering significant value for financing and customer acquisition.

3. Multi-faceted Energy Storage Benefits

Storage systems can simultaneously participate in:

– Peak-off-peak arbitrage

– Capacity compensation

– Ancillary services markets

Only when these three elements converge does ‘direct green power connection + energy storage’ form a truly sustainable closed-loop system.

Real challenges persist, yet the trajectory is irreversible

It must be acknowledged that direct green power connection still faces practical hurdles:

Regional transmission fee policies remain inconsistent

Initial energy storage investment remains disproportionately high

China-EU green certificate systems lack full mutual recognition

Dedicated line construction and approval processes are complex

However, these are matters of ‘how to proceed more swiftly,’ not ‘whether to proceed.’

Local Pioneering: Jiangsu’s Direct Connection Model

Prior to national policy implementation, Jiangsu initiated pilot projects:

Connecting renewable power stations to manufacturing enterprises via 110kV dedicated lines

Configuring approximately 10–20% energy storage capacity

Requiring self-consumption ratios of no less than 60%

The outcomes are clear:

While reduced electricity prices are visible, the true value lies in enterprises obtaining green electricity usage reports for export certification.

Such projects are emerging as model initiatives for ‘industrial green electricity going global’.

The Chinese Value of Direct Green Electricity Connections

In the short term:

It represents a new growth driver for renewable energy investment and energy storage applications, with related investment projected to reach hundreds of billions of yuan by late 2025.

In the long term:

It may become critical infrastructure for China’s manufacturing sector to navigate global carbon regulations and reshape competitiveness.

Future developments may include:

Clearer grid access fees and energy storage market regulations

A service ecosystem integrating ‘green electricity + energy storage + digital management’

Financial innovations centred on direct green electricity connections (e.g., REITs, carbon asset securitisation)

Conclusion: From Cost-Saving Logic to Global Expansion Logic

On-site electricity sales represent pilot initiatives at the industrial park level;

Direct green electricity connections signify national-level energy restructuring.

The former addresses cost concerns,

while the latter resolves issues of identity and access rights.

As global manufacturing competition shifts from ‘price and efficiency’ to ‘carbon footprint and credibility’,

direct green power connections are emerging as a green passport for Chinese enterprises to navigate the future.