Business electricity prices in China 2019-2024

Electricity prices for businesses amounted to nine cents per kilowatt-hour on the U.S. dollar in China in March 2024. Business electricity prices decreased in the country from over 10.4 cents per kilowatt-hour in June 2020. Household electricity in China was cheaper, amounting to 7.8 cents per kilowatt-hour in March 2024. 

Overhauling price calculation

Since its liberalization of the state electricity market, the National Development and Reform Commission introduced an overhaul of the electricity pricing model in mid-2023. Based on the premise of “cost plus reasonable profit” the reforms were aimed at introducing fairer and more transparent rates while also promoting more efficient utilization of the electricity grid. In the new system, businesses enjoy lower electricity rates if they use higher voltages, reflecting a more accurate distribution of grid utilization costs.

Competition in industrial policy

For many years, the Chinese government has been accused of using subsidized electricity prices to give domestic companies an advantage on the world market. In the EV race, they come up again. To accelerate the industrialization of the country, policymakers have set up ambitious development goals and created the necessary framework to achieve them.

For instance, electric battery manufacturers could utilize significant government support. However, often, subsidies like preferential electricity prices are difficult to prove, and in response to European and American accusations, Beijing points to the Inflation Reduction Act in the U.S. and similar subsidy programs in the European Union.