Success and Failure of Electricity Market Deregulation in China and the Solutions: The Jiangsu Case

China’s electricity sector has undergone several rounds of reforms since 1985, with which significant changes have been made, including investment in new generation capacity, deregulation of generation capacity away from central government control, separation of government functions from enterprise management, restructuring of State Power Corporation and establishment of electricity markets. This paper provides a brief history of the archived and ongoing key policies for market reforms in China and Jiangsu Province. The market success and failure against this regime over the preceding half a decade are analyzed from a theoretical perspective, and policy implications are examined for understanding competition in markets based on new and upcoming power related policies. If these challenges or issues are not properly addressed, the potential positive impacts of the new reforms may be undermined. It is therefore recommended for China’s policy makers to strengthen the connection between renewable energy quota system (RQS), green electricity certificate and emission trading scheme (ETS), and improve the design of spot market and ancillary service market.