As renewable energy integration accelerates globally, power systems face mounting challenges in maintaining grid stability and balancing supply-demand mismatches. Ancillary service markets—platforms where flexible resources compete to provide frequency regulation, voltage support, and other grid services—have emerged as essential mechanisms. China has recognized this imperative and developed ancillary service market frameworks, yet a comprehensive benchmarking study reveals meaningful performance gaps when compared with mature international markets.
Researchers examined China's market evolution alongside three globally recognized systems: Germany's balancing market, the PJM interconnection in North America, and Australia's ancillary service arrangements. China has achieved notable strengths in policy architecture and strategic vision. However, deficiencies exist across multiple dimensions. Product design lacks the granularity found in mature markets, limiting the types of services providers can offer and the temporal flexibility available. Price signals in China's markets remain insufficiently responsive to real-time scarcity conditions, reducing incentives for optimal resource deployment. Participation remains concentrated among traditional generators; distributed storage, demand-side flexibility, and emerging technologies participate minimally. Cross-regional resource coordination mechanisms lag behind PJM and Australian models, preventing efficient utilization of geographically dispersed flexible capacity.
The analysis identifies three priority reform pathways. First, technical support requires enhanced forecasting capabilities, real-time monitoring systems, and grid operator tools to manage variable renewable output. Second, market mechanisms must be redesigned to improve price formation, expand eligible participants, and strengthen incentive compatibility—ensuring participants' profit-maximizing behavior aligns with grid needs. Third, policy standards should be harmonized across provinces and harmonized with international best practices to facilitate interstate resource trading.
Implementing these recommendations could substantially improve China's ability to reliably and economically integrate renewable energy while maintaining grid stability. The study underscores that ancillary service market design is not merely a technical exercise but a strategic lever for enabling China's energy transition.
