The era of a decades-old electricity pricing system is drawing to a close, fundamentally reshaping how businesses and potentially consumers pay for power.

In June 2026, Mr. Li, the owner of a small food processing plant in Zhengzhou, made a significant operational change: he shifted the operating schedule of his dryer from the late-night hours to a 10 a.m. start. For years, he had scheduled high-energy-consuming equipment after 11 p.m. to take advantage of off-peak "valley" rates, which were about 0.3 yuan per kilowatt-hour cheaper. This led to worker complaints and higher equipment failure rates. By 2026, his electricity trading app showed that midday prices, when solar photovoltaic (PV) output was high, had dropped to 0.3 yuan/kWh—cheaper than the deep night rate. His decision to reschedule saved on electricity costs and eliminated the need for overnight shifts. While Mr. Li may not know the specific policy document number, this subtle change on his bill is a tangible result of a sweeping market-oriented reform affecting the entire power generation, retail, and consumption chain.

The Policy Document Rewriting Four Decades of Pricing

The institutional trigger for this transformation was a clearly numbered document. The National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) issued the "Basic Rules for the Medium- and Long-Term Electricity Market" (NDRC Energy Regulation [2025] No. 1656), specifying that from March 1, 2026, for entities directly participating in market transactions, government-mandated time-of-use (TOU) price levels and periods would no longer be artificially set. Time-of-use pricing is not new. It was piloted in some regions in the 1980s and 1990s and widely adopted nationwide in the 21st century, dividing the day into peak, standard, and off-peak (with super-peak in some areas) periods. This classic "peak shaving and valley filling" tool guided users to shift consumption and operated for decades. Now, it is beginning to phase out. An analysis of official documents shows nine provinces and municipalities have explicitly implemented the cancellation of government-set fixed TOU pricing: Guizhou, Hebei South Grid, Hubei, Shaanxi, Jilin, Yunnan, Chongqing, Liaoning, and Henan, with Jiangsu and Shanxi provinces in the public consultation stage. Supporting measures continue. In June 2026, several provinces ceased implementing super-peak and deep-valley pricing during summer peak demand periods. It is important to clarify that what is being canceled is the government-mandated "fixed" TOU pricing, not the TOU pricing mechanism itself. Market-based TOU prices will still exist, but the pricing authority shifts from the government to the market.

Solar Power Surplus Turns Midday into a Price Valley

The reason for this timing lies in the load curve. The original intent of fixed TOU pricing was to suppress evening peak demand and encourage nighttime consumption. However, as solar PV penetration increases, concentrated midday solar output has turned what was once a standard or peak period into a "duck neck"-shaped low, creating a power surplus and driving prices down, with some areas even experiencing negative prices. The old time period definitions became severely disconnected from actual supply and demand, with government-drawn "peak-valley lines" blocking accurate price signals. Canceling fixed TOU returns this line to the market, allowing prices to fluctuate daily, or even every 15 minutes, based on real-time conditions. As the spot electricity market achieves full coverage and the share of new energy generation rises, similar midday low prices and occasional negative prices are likely to occur more frequently. More accurate pricing guides consumption toward periods of solar abundance, which is both a means and an end of the reform. Key data shows that in the first half of 2026, nine provinces had implemented the cancellation of government-set fixed TOU, with Jiangsu and Shanxi under consultation. In Shaanxi, first-year estimates showed midday electricity prices averaged about 0.18 yuan/kWh, while evening prices were around 0.42 yuan/kWh.

Real Savings for Those Who Can Shift Consumption

For end-users, the reform presents a choice: can they shift their power usage? Taking Shaanxi as an example, users maintaining their original consumption patterns might see electricity costs rise by 5% to 8%. However, shifting adjustable loads to the low-price period between 9 a.m. and 5 p.m. could save over 10% compared to the original tariff. A more extreme example is in Guizhou, where an aluminum smelter adjusted its production schedule to concentrate consumption during high solar output periods, reducing its monthly electricity bill by approximately 18%. Mr. Li's dryer is a classic example of an "adjustable load." He could shift usage from night to midday because the drying process is inherently flexible. Not all enterprises have this freedom. Continuous production lines and facilities with rigid power demands cannot shift, leaving them to passively absorb price volatility. The answer to this choice determines whether the same reform brings benefits or pressure to different businesses.

The End of Easy Profits for Energy Storage

The sector most significantly impacted by this reform is commercial and industrial energy storage. In recent years, user-side storage projects relied on "two charge, two discharge" cycles and fixed peak-valley price spreads of over 0.6 yuan to achieve internal rates of return around 8%, attracting substantial "pure financial investment" capital. For instance, a 100 MW/200 MWh project in Shandong could generate annual revenue of about 20 million yuan, predicated on a local maximum price spread of nearly 1 yuan. This logic is now breaking down. Since September 2025, price spreads in 16 provinces including Jiangsu and Hunan have collectively fallen below the 0.6 yuan threshold, with spreads in some periods as low as 0.03 yuan. The impact quickly showed in data: in Q1 2026, new operational capacity for user-side new energy storage was only about 545 MW/1252 MWh, a sharp decline of roughly 50% year-on-year. With the disappearance of fixed price spreads, the simple era of investing based on calculated spreads from "charge low, discharge high" is over. Revenue sources are forced to diversify from simple arbitrage to multiple channels like spot market trading, frequency regulation, demand-side management, and solar-storage synergy. For professional storage companies, this is a test of capability; for capital that only knows how to calculate spreads, it's a heavy blow.

Residential Electricity Prices: Temporarily Shielded

Whether ordinary households will face price increases is a major concern. The policy stance is clear: this round of canceling fixed TOU pricing is strictly limited to commercial and industrial users in the market. Residential electricity tariffs adhere to the "three no changes": base tariffs remain unchanged, tiered pricing remains unchanged, and TOU pricing for home charging piles remains unchanged. The reform prioritizes safeguarding people's livelihoods. There is also another concern: historically, higher commercial and industrial tariffs have subsidized lower residential tariffs. As commercial and industrial users fully enter the spot market with cost-reflective pricing, these costs may be passed along industrial chains to the prices of goods and services. Some discussions cite year-on-year electricity price increases as of April 2026, suggesting cross-subsidies will eventually need reassessment. The divergence between these views centers on whether and how quickly the "already marketized commercial/industrial sector" and the "temporarily protected residential sector" will converge in the future. While not an immediate bill issue, this is the true long-term variable of the reform.

What This Means for You

The impact operates on several levels. Most directly affected are commercial and industrial market users, electricity retailers, and storage operators, whose consumption strategies and profit models are directly rewritten from "calculating spreads" to "trading and competing on operations." The second layer includes manufacturers, property managers of commercial buildings, and distributed solar investors. They must recalculate: which loads can be shifted, whether self-consumption remains economical, and where the new anchor points for storage project returns lie. The third layer, seemingly most distant, involves ordinary residents. While residential tariffs are currently unchanged, the electricity costs for commerce and industry will ultimately influence the prices of the goods and services everyone purchases. This reform, happening outside the home electricity meter, will eventually appear on everyone's life expenses in another form. The direction of this reform is clear: to restore electricity's commodity attributes, where more accurate pricing leads to more efficient resource allocation. However, whether it translates to savings or higher costs on a specific bill depends on a simple factor: can your electricity consumption be shifted? That calculation must be made individually.