China's Virtual Power Plant Revolution: Policy Tailwinds & Trillion-Yuan Market on the Horizon

Key Points

The National Energy Administration (国家能源局) has released pilot programs focusing on Virtual Power Plants (虚拟电厂) as a cornerstone for China’s new power system.
VPP pilots aim to aggregate distributed resources (like solar, controllable loads, energy storage) to boost grid flexibility, reduce power gaps, and promote new energy use.
Companies like Xuji Electric (许继电气) and Langxin Technology (朗新集团) are already deploying VPP solutions and seeing significant growth, including adding 10 GW to Langxin’s solar platform in Q1 2025.
The market for Virtual Power Plants in China is projected to grow substantially, from ¥102 billion RMB ($14.17 billion USD) in 2025 to a massive ¥1 trillion RMB ($138.89 billion USD) by 2030.

Get ready, because the Virtual Power Plant (VPP) landscape in China is not just heating up; it’s set for explosive growth, and recent government policies are adding serious thrust.

We saw Virtual Power Plant concept stocks catch fire on Thursday, June 5th, following some game-changing policy drops.

Shares in companies like Anke Intelligent Electric (Ankào Zhìdiàn 安靠智电, 300617) rocketed over 13%.

Others, including Xinlian Electronics (Xīnlián Diànzǐ 新联电子, 002546) and JinZhi Technology (Jīnzhì Kējì 金智科技, 002090), hit their daily trading limits – a clear sign of investor excitement.

Even giants like Dongfang Electronics (Dōngfāng Diànzǐ 东方电子, 000682) and Yijiahe (Yìjiā Hé 亿嘉和, 603666) weren’t left out, posting solid gains.

What’s Sparking the Surge? Fresh Government Policy & Pilot Programs

The buzz is all about the National Energy Administration (Guójiā Néngyuán Jú 国家能源局).

They just rolled out the “Notice on Organizing the First Batch of Pilot Projects for New Power System Construction” this past Wednesday.

This isn’t just another paper; it’s a roadmap.

It clearly outlines pilot programs in seven key areas critical for modernizing China’s energy grid.

And guess what’s front and center? Grid-forming technology and, crucially, Virtual Power Plants (Xūnǐ Diànchǎng 虚拟电厂).

VPPs are being positioned as a cornerstone for aggregating distributed resources and making the entire power grid more flexible and responsive.

Digging Deeper: The Nuts and Bolts of VPP Pilot Programs

The notice is pretty specific about VPPs.

It calls for establishing or upgrading a variety of VPP types, tailored to local conditions.

The main goals for these VPPs include:

Aggregating distributed power resources effectively.
Boosting flexible regulation capabilities of the grid.
Shrinking power supply gaps, especially during peak demand.
Promoting the consumption of New Energy (Xīn Néngyuán 新能源) sources like solar and wind.

How will they do this?

By smartly pooling together resources like:

Distributed power generation (think rooftop solar).
Controllable loads (smart appliances, industrial machinery that can adjust consumption).
Energy Storage (Chǔnéng 储能) systems on the demand side.

Then, through coordinated optimization control, these VPPs can unlock significant flexible regulation capabilities.

The government is also pushing for innovation in VPP business models.

They want to see VPPs generate revenue through diverse streams:

Participating in electricity markets (buying and selling power).
Offering demand response services (getting paid to reduce or shift energy use).
Providing energy-saving services to consumers.
Conducting energy data analysis for insights.
Designing comprehensive energy solutions.
Engaging in Carbon Trading (Tàn Jiāoyì 碳交易) related services.

Key VPP Pilot Program Goals

Aggregate distributed resources effectively
Boost grid flexible regulation capabilities
Shrink power supply gaps
Promote New Energy consumption

Not Just a Fad: VPPs are Core to China’s New Power System Strategy

This isn’t a sudden development.

The Virtual Power Plant concept has already been woven into the national-level core strategy for building a New Power System.

Documents released over the past few years, like the “Action Plan for Accelerating the Construction of a New Power System,” have solidified the industry status of VPPs as vital platforms for aggregating flexible resources.

What does this “Action Plan” envision?

It champions the fusion of cutting-edge power technology with advanced information and communication technology (ICT).

The goal? To elevate the digital and intelligent capabilities of the entire power system.

This means making distribution networks:

Observable: Knowing what’s happening in real-time.
Measurable: Quantifying energy flows accurately.
Controllable: Being able to adjust operations remotely.
Adjustable: Adapting to changing conditions on the fly.

This level of sophistication is essential to support the regulation needs of a grid with massive distributed power sources, adaptable loads, and new forms of Energy Storage.

Who’s Who in the VPP Zoo? Companies Making Moves

Several publicly listed companies are already deep in the VPP game.

For instance, Xuji Electric (Xǔjì Diànqì 许继电气, 000400) recently told investors they’re good to go with integrated solutions for Virtual Power Plant projects.

Their VPP operation management platform and controllable resource management terminal products are already being deployed in real-world projects, like the Ningxia and Hubei Virtual Power Plants.

Then there’s Langxin Technology (Lǎngxīn Jítuán 朗新集团, 300682).

They also spilled the beans on their VPP activities during investor surveys.

In the first quarter of 2025, their solar cloud platform—super relevant to their VPP business—added over 10 GW of capacity.

Plus, they achieved a significant breakthrough in centralized power station agency trading. These guys are not messing around.

Snapshot of Companies in China’s VPP Market

Xuji Electric (000400): Deploys integrated VPP solutions, operation management platforms, and resource management terminals in real projects (e.g., Ningxia, Hubei).
Langxin Technology (300682): Added over 10 GW capacity to solar cloud platform in Q1 2025, achieved breakthrough in centralized power station agency trading.

The Big Picture: A Trillion-Yuan Market Awaits

So, what’s the market potential for these Virtual Power Plants in China?

Hold onto your hats.

According to forecasts by Huatai Securities (Huátài Zhèngquàn 华泰证券, 601688):

China’s VPP market is expected to hit ¥102 billion RMB ($14.17 billion USD) by 2025.

And it gets even richer:

By 2030, the VPP market size is projected to skyrocket to a mind-boggling ¥1 trillion RMB ($138.89 billion USD).

That’s a compound annual growth rate (CAGR) of 37.2%. Massive.

This isn’t just incremental growth; it’s a fundamental shift in how energy will be managed and monetized.

The development of Virtual Power Plant infrastructure is clearly a major priority, signaling vast opportunities for innovation, investment, and strategic partnerships in China’s evolving energy sector.