(Yicai Global) May 22 -- China Southern Power Grid has completed the country's first spot trading of electricity, marking a shift toward market-oriented pricing, according to Xinhua News Agency.

All of southern Guangdong province's 190 power generators and 123 power distributors took part along with three major users, the report said yesterday.

During the trial transactions, prices came in far lower than the daily CNY0.75 per kilowatt-hour charged for industrial power use. Prices averaged CNY0.263 (less than 4 US cents) per kWh. Those for off-peak nighttime hours were CNY0.082 per kWh, while those for peak times stood at CNY0.362, the report said.

China's power prices are currently set by the state, and spot trading represents a move toward liberalizing them. Under the new system, a trading platform matches bids to derive prices based on supply and demand, Xinhua said.

A price is formed every 15 minutes and 96 prices are formed in a day, the report said, citing Chen Ye, deputy general manager of CSG unit Guangdong Power Grid. That way electricity prices vary from place to place and period to period, he added.

Beijing unveiled plans last year to start spot power trading in western Inner Mongolia and the provinces of Fujian, Gansu, Guangdong, Shandong, Shanxi, Sichuan, and Zhejiang.

According to those market liberalization plans, China will have a mid- and long-term power market as well as a spot market in the future. Most provinces and cities have already introduced the former with annual and monthly cycles, but this is the first time that day-ahead and intra-day spot trading was conducted.