CHINA Law and Practice Contributed by: Yan Gao, Yilin Wang and Zhuohui Li, Zhong Lun Law Firm
Zhong Lun Law Firm 22–24/F & 27–31/F, South Tower of CP Center 20 Jin He East Avenue Chaoyang District Beijing 100020 China Tel: +86 10 5957 2288
Fax: +86 10 6568 1022/1838 Email: gaoyan@zhonglun.com Web: www.zhonglun.com
1. Structure and Ownership of the Power Industry 1.1 Law Governing the Structure and Ownership of the Power Industry Overview of Industry Reform China’s power industry has undergone three rounds of major reform. The first round, initiated in 1988, separated govern- ment functions from enterprise operations and estab- lished provincial-level institutions as independent operational entities. The second round, launched in 2002 under the Pow- er System Reform Plan (State Council, effective 10 February 2002), restructured the former State Power Corporation into separate generation and grid enter- prises, unbundling generation from transmission and distribution. The third round, initiated by the Several Opinions on Further Deepening Power System Reform (CPC Cen- tral Committee and State Council, effective 15 March 2015), introduced competitive electricity markets, independent power trading institutions, incremental distribution network reform, and retail market liber - alisation. This third round remains ongoing and has accelerated significantly since 2024. China’s power industry has now substantially achieved the separation of generation from grid operations. Transmission and distribution remain regulated natu- ral monopolies operated exclusively by state-owned
enterprises, while generation, storage, incremental distribution networks and electricity retail are open to market competition and private investment. In 2025, market-based transactions accounted for 64% of total electricity consumption. Legal and Regulatory Framework Core legislation Three statutes form the foundational legal framework. • The Energy Law (effective 1 January 2025) estab- lishes overarching national policy on energy secu- rity, low-carbon transition and market reform, and applies across all segments of the power industry. • The Electricity Law (effective 1 April 1996, most recently amended in 2018) governs the entire power value chain, covering project construction, generation, grid operation, pricing, facility protec- tion, and supply relationships. • The Renewable Energy Law (effective 1 January 2006, most recently amended in 2009) provides the specialist legal framework for renewable energy development and grid integration. Administrative regulations, state council policy documents and departmental rules At the administrative regulation level, the Regulations on Electric Power Supervision (State Council, effective 1 May 2005) establish the formal supervisory frame- work, defining regulatory functions, enforcement pro- cedures and market order governance rules. State Council normative documents play an impor- tant policy guidance role. The Implementation Opin-
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