One kilowatt-hour of electricity carries different prices across southern and northern China. In April, during peak hours, spot electricity prices in Guangdong reached a high of 0.978 yuan per kilowatt-hour, while in Shandong, spot prices dipped as low as -0.023 yuan per kilowatt-hour. This stark north-south price divergence, a high and a low, has been the most visible phenomenon in China's electricity spot market this year, particularly in the second quarter, sparking questions from netizens.

Southern electricity consumers worry about persistently rising prices, while northern power generators face profit pressure from negative pricing. As the construction of a unified national electricity market deepens, why do such clear regional price differences still emerge?

In Guangdong, high spot prices have been primarily driven by temperatures. On April 14, the province declared the start of summer, nearly a month earlier than usual, with the heat directly fueling air conditioning demand. Industrial and service sectors struggled to flexibly reduce loads during peak hours. "From April to July 28, electricity sales in the southern region reached 558.2 billion kilowatt-hours, a year-on-year increase of 7.9%. The regional peak load climbed to 275 million kilowatts, up 7.26% year-on-year," Chen Yufang, deputy director of the Trading Organization Department at the Guangzhou Power Exchange Center, shared data with reporters. Simultaneously, multiple constraints hit the generation side. Internationally, geopolitical conflicts disrupted energy supply chains, increasing primary energy price volatility. Domestically, low water inflows before the flood season in the southern region reduced hydropower output, while persistent overcast weather in Guangdong further hindered solar power generation. With a tightening supply of low-cost clean electricity, the system had to activate high-cost gas units during peak hours to ensure supply. Data from the Guangzhou Power Exchange Center shows that the average day-ahead spot market price in Guangdong was 0.516 yuan per kilowatt-hour in April, up 44% month-on-month. By May, as supply and demand eased, the day-ahead spot market average fell to 0.414 yuan per kilowatt-hour, a 20% month-on-month decline. Overall, Guangdong's high spot prices were a temporary phenomenon during periods of extreme supply-demand tension, not the norm.

In stark contrast to the south, negative spot prices have been frequent in northern markets. In Shandong, the average spot price in April was 0.330 yuan per kilowatt-hour, with negative prices accumulating for 199 hours. The situation was similar in May. In Liaoning, the April average spot price was as low as 0.132 yuan per kilowatt-hour, with negative prices lasting 374 hours. By May, the average rose slightly to 0.206 yuan per kilowatt-hour, but negative price hours remained high at 343 hours. "The occurrence of negative prices in Shandong and Liaoning results from multiple factors, including imbalanced supply-demand structures and insufficient system regulation resources," said Zhang Xian, director of the Market Department at the Beijing Power Exchange Center. Specifically, during periods of strong wind and intense sunlight, new energy generation surges, briefly exceeding local demand. This supply-demand contradiction is further amplified during holidays and the heating season. During the 14th Five-Year Plan period, pumped storage power stations and new energy storage have been rapidly deployed within the State Grid's operating area, and coal power flexibility retrofits have grown significantly. However, the growth rate of regulation capacity still lags behind the expansion pace of new energy installations. Additionally, some power generators, securing basic revenue through off-market compensation, are willing to bid negative prices to ensure their generation is prioritized, a confluence of factors leading to negative pricing.

Electricity spot prices, in essence, act as a "thermometer" for real-time supply-demand relationships. When demand exceeds supply, prices quickly "heat up," signaling a shortage and incentivizing controllable units like coal and gas power to operate stably and fill the supply gap, safeguarding the bottom line. When supply exceeds demand, prices "cool down" or even turn negative, signaling a surplus, guiding energy storage charging and flexible load management to shift consumption, minimizing wind and solar curtailment, and aiding the green energy transition. "The fluctuation of spot prices in various regions is within a reasonable range. It is not appropriate to simply interpret them as rising or falling. Price differences across regions indicate that the spot market is increasingly sensitive to changes in load, generation structure, new energy output, and regulation capacity," noted Zhang Xing, Deputy Director General and Spokesperson of the Comprehensive Department at the National Energy Administration. The pursuit of a unified national market, with uniform rules and smooth factor flow, does not mean forcing electricity prices across all regions to be equal. The objective regional price differences reflect the market's price discovery function and its role in guiding optimal resource allocation, driving a more efficient and secure power system operation.

Do fluctuations in spot electricity prices affect household electricity bills? The answer is no. In China, residential and agricultural electricity consumption is subject to government-set prices and does not fluctuate with the spot market. This mechanism provides a solid "firewall," ensuring stable electricity prices for people's livelihoods. It is commercial and industrial users whose prices are linked to the spot market. However, even for them, the vast majority of their electricity consumption is pre-locked through the medium- and long-term market, with only a limited portion directly exposed to spot price volatility. This relies on China's market system, where the "medium- and long-term market locks in returns, and the spot market reflects real-time supply and demand." The medium- and long-term market acts as a "ballast stone," securing prices for most traded electricity. The spot market functions as a "thermometer," sensitively reflecting current supply-demand dynamics. The two work together, releasing price signals to guide rational decisions on both the supply and demand sides, while also building a buffer for market participants against violent price swings. "From actual operation, although spot prices surged temporarily in April, the comprehensive monthly medium- and long-term transaction price in the Guangdong power market was 0.372 yuan per kilowatt-hour, lower than the spot average for the same period," Chen Yufang told reporters. Due to significant spot price volatility in March and April, market participants' hedging needs increased. The coverage rate of user-side medium- and long-term contracts in the southern regional wholesale market for May 2026 rose to 78%. When southern spot prices are high, medium- and long-term contracts, with their "low prices and locked quantities," support electricity-consuming enterprises. Conversely, when northern spot prices are low or negative, these contracts ensure reasonable returns for power generators through stable transaction prices.

Lanzhou Aluminum Co., Ltd., located in the northwest, has deep experience with this. The electrolytic aluminum industry is energy-intensive, with electricity costs accounting for nearly 40% of production costs, making it highly sensitive to price changes. In the first half of this year, the extreme difference between north-south spot prices reached 0.550 yuan per kilowatt-hour: the real-time spot average in Gansu was as low as 0.140 yuan per kilowatt-hour, while Guangdong's peak hours hit 0.755 yuan per kilowatt-hour. This huge price gap tested the operational resilience of various entities. "If we simply followed spot prices, our production and operation rhythm would easily be dictated by short-term market conditions," Xu Wei, assistant to the general manager of Lanzhou Aluminum Co., Ltd., told reporters. Based on regional market rules, the company built a layered electricity procurement plan: locking in the annual base electricity scale through medium- and long-term contracts to stabilize costs, and using the spot market for small short-term power deviations. Combined with energy-saving renovations and smart energy management, the company achieved stable or lower energy costs, developing a robust operational rhythm adapted to the market environment.

On July 3, a trending topic on Chinese social media discussed "Foreign netizens discussing coming to China for summer heat relief." This seemingly lighthearted topic points to a hard reality: the confidence for "air conditioning freedom" comes from stable, reliable electricity supply and low prices. In the United States, the impact of electricity market fluctuations is directly burning household budgets. According to the latest data from the U.S. Energy Information Administration, the average national residential electricity price has risen to a record high of 18.83 US cents per kilowatt-hour. The situation in Europe is similarly concerning. Eurostat data shows that the average household electricity price in Ireland is as high as 40.42 euro cents per kilowatt-hour, 38.66 cents in Germany, 34.99 cents in Belgium, with the EU average reaching 28.96 cents. The phenomenon of "negative prices alongside high bills" is particularly noteworthy. In the first quarter of 2026, the EU-27 saw negative day-ahead market prices for 1,223 hours, double the previous year. However, the drop in wholesale market prices did not transmit to the retail end, with residential energy bills rising instead of falling, making ordinary households the ultimate bearers of market volatility.

In contrast, China's unified national power market system has charted a path with Chinese characteristics. Guo Hongye, an associate researcher at the Department of Electrical Engineering at Tsinghua University, told reporters that mature markets in Europe and the US tend to rely on spot prices to guide investment and demand-side response. "China has chosen a composite path that balances efficiency and stability, relying on medium- and long-term transactions to stabilize expectations, using the spot market to release supply-demand signals, and supporting capacity mechanisms to maintain the supply bottom line, ultimately achieving coordinated optimization of source, grid, load, and storage," Guo added. The core advantage of this institutional design lies in the concept of "unified planning." In terms of "hard connectivity," China has built the world's largest and fastest-growing renewable energy system, with 46 AC/DC ultra-high voltage transmission lines in operation. For "soft connectivity," a cross-grid trading mechanism was formally established in 2025, enabling interconnection for medium- and long-term, spot, and green electricity trading between the State Grid and China Southern Power Grid. Currently, inter-provincial spot markets and 7 provincial-level spot markets are operating continuously, with 29 provincial-level grid areas achieving continuous spot trading. The results are compelling. In 2025, the national market-traded electricity volume reached 6.6 trillion kilowatt-hours, accounting for 64% of total electricity consumption. New energy's market-traded electricity volume accounted for 58% of its total generation, making the market the main channel for new energy consumption. "As the share of new energy continues to rise, it is difficult for a single province to independently resolve the supply-demand mismatch caused by new energy output fluctuations. A unified national market can leverage the complementary advantages of different regions' generation structures, load characteristics, and output timing, finding a balance between system security and economic operation," Guo said. While many overseas residents weigh "turning on the air conditioner" against "checking the bill," Chinese residents can enjoy cool comfort. This often-taken-for-granted daily peace is a practical result of the power market system design and the most compelling "humblebrag" behind the trending topic of "foreigners discussing coming to China for the summer."

According to the latest data from the National Energy Administration, China's electricity market operated smoothly overall in the first half of 2026. The volume of market-traded electricity grew to 3.68 trillion kilowatt-hours, a year-on-year increase of 24.2%. Of this, medium- and long-term trading reached 3.26 trillion kilowatt-hours, accounting for nearly 90% of the total. The unified national power market system is now moving from initial establishment towards basic completion. "The construction of the electricity market will continue to deepen. In 2026, more than half of China's provinces will officially operate their electricity spot markets. More regional inter-provincial electricity trading will operate normally, the retail market will be orderly and standardized, the quality and efficiency of medium- and long-term trading will improve, the auxiliary services market will accelerate, and market supervision will deepen," said Fan Pengfei, dean of the Energy Policy and Market Research Institute at the Electric Power Planning & Engineering Institute. In February this year, the State Council issued the "Implementation Opinions on Improving the Unified National Electricity Market System," outlining the construction path for the "15th Five-Year Plan" period. It proposed 19 key tasks, including promoting cross-grid market trading, increasing cross-provincial transmission capacity and the proportion of clean energy transported, strengthening multi-channel centralized optimization, integrated construction and operation of the southern regional power market, and improving electricity mutual aid in the Yangtze River Delta. The target is for market-traded electricity to account for about 70% of total electricity consumption by 2030.

A series of reform measures are accelerating implementation. The market-oriented utilization of transmission channels is gradually improving. In June 2026, the State Grid and China Southern Power Grid completed the country's first transmission right transaction, with the market-oriented trading of the Yunxiao DC transmission line connecting Fujian and Guangdong officially launched. This marks the transition of China's transmission rights market from theoretical exploration to practical application. The number of new market participants continues to expand. The number of new entities registered with the Beijing Power Exchange Center has exceeded 10,000. By June, the volume of virtual power plant transactions reached nearly 5 billion kilowatt-hours. Since the southern regional power market entered continuous settlement trial operation, the number of new entities such as virtual power plants and independent energy storage has increased by over 50%, and the number of electricity sales companies has grown by 53%. The value of market transactions in cross-regional resource allocation and power supply assurance continues to be demonstrated.