Addressing the energy trilemma: Progress and evaluation of electricity market reform in China

Abstract

With the growing global emphasis on energy transition, achieving the simultaneous goals of accessibility, reliability, and sustainability—commonly referred to as the “energy trilemma”—has become a central challenge in the energy sector. As the world's largest electricity consumer, China has launched two rounds of power market reforms in 2002 and 2015 to address the trilemma challenges in the electricity sector. However, significant regional disparities in reform progress persist. This study develops a comprehensive evaluation framework using the Analytic Hierarchy Process (AHP) to assess the performance of 26 provincial electricity markets under the State Grid across three key dimensions: energy affordability, supply security, and environmental sustainability. The findings indicate that electricity market reforms have advanced across all provinces, with relatively small variations in progress observed at the provincial level. However, achieving a balance among multiple objectives remains a challenge. Composite scores range from 86.5 to 93.4, with 88 % of provinces scoring above 90 in supply security, but greater variation is observed in environmental sustainability (scores ranging from 82.4 to 92.9). Notably, while spot markets have contributed to enhancing efficiency, they could potentially undermine supply security, and some power-exporting provinces are unexpectedly facing certain supply security risks. This study provides important policy insights into how electricity market reform can better align with China's energy transition strategy, ensuring coordinated and sustainable development.