(Yicai) July 8 -- Professionals expressed concerns about negative electricity prices after the spot power market of China's eastern Shandong province officially started trading after the last 30-month trial phase.

Power prices may fall below zero more often with spot trading, impacting companies' willingness to invest in renewable energies, especially photovoltaic energy, which has more volatile prices, Qin Yan, chief electricity and carbon analyst at London Stock Exchange Group, told Yicai.

"Negative power prices and peak prices will co-exist," Qin noted.

New energy investors, including energy groups and central government-owned enterprises, are lowering their expectations on new energy investments' return rate, a spot electricity market insider told Yicai.

Technical means can be used to provide a reasonable pricing strategy for PV energy to avoid spot market risks, according to professionals. Combining PV stations and energy storage is a broadly supported solution.

Shandong's new energy installation capacity was 91.2 million kilowatt-hours as of the end of last year, of which 56.9 million kWh were of PV installation capacity, ranking first nationwide. It generated over 134.9 billion kWh of new energy power last year, becoming the first provincial-level region to generate over 100 billion kWh of wind and solar power-generated electricity in one year.

The first time Shandong's spot electricity prices fell below zero was in 2019 when they reached minus CNY40 (USD5.50). The last time it happened was during the Labor Day holiday last year, as power supplies exceeded power-use load because of a big increase in electricity generated by wind turbines and solar panels.

During the peak power consumption last summer, Shandong's spot electricity market incentivized coal-powered units to increase their power generation capacity by 2.7 million kilowatts through high prices, Ma Qiang, head of the spot market division of the power control and adjustment center under State Grid's Shandong branch.

The electricity spot market in Shandong also managed to guide consumers to transfer 2 million kW of power usage to off-peak hours by charging different prices at different time slots, Ma added.

The construction of a unified spot electricity market is one of the key links of China's institutional power market reform because it regards electricity as a good, professionals told Yicai. Before Shandong, southern Guangdong province and northern Shanxi province also launched their spot power markets.

Editors: Shi Yi, Futura Costaglione