{"id":60123944,"date":"2026-03-17T17:48:29","date_gmt":"2026-03-17T17:48:29","guid":{"rendered":"https:\/\/dialogue.earth\/?p=60123944"},"modified":"2026-04-07T16:17:15","modified_gmt":"2026-04-07T15:17:15","slug":"can-a-uk-china-power-trading-venture-assist-chinas-energy-transition","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/energy\/can-a-uk-china-power-trading-venture-assist-chinas-energy-transition\/","title":{"rendered":"Can a UK-China power-trading venture assist China&#8217;s energy transition?"},"content":{"rendered":"\n<p>Bitong Energy brings together the UK\u2019s Octopus Energy and China\u2019s PCG Power to support the \u201c<a href=\"https:\/\/octopus.energy\/press\/more-news-press-releases\/octopus-energy-announces-major-china-joint-venturet\/\">green transformation<\/a>\u201d of China\u2019s power market.<br><br>Dialogue Earth talked to experts in both countries to find out how this cooperation could advance China\u2019s low-carbon development and what benefits it may bring to the UK.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-are-the-motivations-behind-the-uk-china-deal\">What are the motivations behind the UK-China deal?<\/h2>\n\n\n\n<p>In late January, UK Prime Minister Keir Starmer\u2019s trip to China brought good news for the energy industry: the establishment of Bitong Energy to sell clean energy primarily in south China&#8217;s Guangdong province.&nbsp;<\/p>\n\n\n\n<p>Foreign firms have long operated in China\u2019s power sector, from equipment suppliers such as Sweden\u2019s ABB to utilities like France\u2019s EDF, but participation in market trading and optimisation is a different proposition.<\/p>\n\n\n\n<p>The significance of the Octopus move, according to Zhu Linxiao, a policy advisor at UK-based think-tank E3G, lies in its \u201creverse direction\u201d. Rather than energy expertise being exported from a country that <a href=\"https:\/\/about.bnef.com\/insights\/clean-energy\/china-dominates-clean-technology-manufacturing-investment-as-tariffs-begin-to-reshape-trade-flows-bloombergnef\/\">dominates<\/a> the field globally, China will import it.<\/p>\n\n\n\n<p>China accounted for <a href=\"https:\/\/www.bruegel.org\/analysis\/china-can-decarbonise-world-even-wont-fix-its-overcapacity-problem\">92%<\/a> of the world&#8217;s solar module manufacturing and 82% of wind turbines as of 2024. In 2025, its clean-tech <a href=\"https:\/\/www.reuters.com\/markets\/commodities\/chinas-power-energy-clean-technology-milestones-2025-2026-01-23\/\">exports<\/a> surged by 20% to USD 222\u202fbillion.<\/p>\n\n\n\n<p>But the deal behind Bitong is \u201cmore about software than hardware\u201d, said Chris Aylett, environment research fellow from UK think-tank Chatham House.<br><br>\u201cOctopus is now the biggest player in UK energy. They&#8217;re pioneering new technologies to manage energy systems,\u201d said Aylett. \u201cDespite China&#8217;s now well-recognised status as a world leader in clean tech, there is still demand in China for foreign, and specifically British, expertise and innovation in energy systems and decarbonisation.\u201d\u00a0<\/p>\n\n\n\n<div class=\"wp-block-cd-pull-quote block--pull-quote\"><div class=\"block--pull-quote__wrapper\"><blockquote class=\"block--pull-quote__quote\">There is still demand in China for foreign, and specifically British, expertise and innovation in energy systems<\/blockquote><cite class=\"block--pull-quote__cite\">Chris Aylett, Chatham House<\/cite><\/div><\/div>\n\n\n\n<p>Zhu also acknowledged that \u201con the software side\u201d, China still has \u201csome gaps compared with the west\u201d. He pointed to Bitong\u2019s rare business model \u2013 \u201cwestern software plus Chinese hardware operating together\u201d \u2013 as a first of its kind.<\/p>\n\n\n\n<p>The equal partnership creates the real &#8220;excitement&#8221;, said Gao Hongchao, principal investigator for China&#8217;s National Science and Technology Major Project, who provided consultancy for the cooperation.&nbsp;<\/p>\n\n\n\n<p>\u201cOverseas capital markets usually value software assets higher than those in the Chinese market, but at least three Chinese companies have similar or even more advanced technical capabilities,\u201d Gao said.<\/p>\n\n\n\n<p>\u201cChina&#8217;s software markets are still in the cultivation stage,\u201d he added. \u201cOctopus offers fresh direction and hope for greater Sino-foreign investment and cooperation.\u201d<br><br>On the UK side, the economic benefits are straightforward. According to a <a href=\"https:\/\/octopus.energy\/press\/more-news-press-releases\/octopus-energy-announces-major-china-joint-venturet\/\">statement<\/a> by Octopus, half of the profits from China will return home.<br><br>Aylett said that&nbsp;more important than this will be &#8220;technological learning gained from exposure to the intricacies of the massive, rapidly changing Chinese energy system. This should hopefully translate into more powerful tools to efficiently manage the UK&#8217;s energy system.\u201d<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-can-it-assist-china-s-energy-transition\">How can it assist China\u2019s energy transition?<\/h2>\n\n\n\n<p>Bitong <a href=\"https:\/\/octopus.energy\/press\/more-news-press-releases\/octopus-energy-announces-major-china-joint-venturet\/\">plans<\/a> to trade up to 140 terawatt-hours of renewable power per year by 2030 in the Guangdong spot electricity market, \u201cwhere energy is bought and sold in real time for a smarter, more efficient grid\u201d.<\/p>\n\n\n\n<p>China had only <a href=\"https:\/\/www.cet.energy\/2022\/09\/19\/progress-on-the-spot-power-market-development-in-china\/\">seven spot markets<\/a> in 2022. The number has recently increased to 29 in trials, with plans to <a href=\"https:\/\/reglobal.org\/key-trends-for-power-market-players-in-china\/\">introduce more<\/a>.<br><br>Most electricity trading is still based on fixed medium- to long-term agreements (MLTs). As detailed in an earlier <a href=\"https:\/\/dialogue.earth\/en\/energy\/why-power-spot-markets-are-key-to-chinas-new-energy-system\/\">Dialogue Earth article<\/a>, while MLTs \u201ctheoretically have the advantage of stabilising electricity prices and averting risk\u201d, they lack \u201cflexibility for adjustments\u201d. <\/p>\n\n\n\n<a class=\"wp-block-cd-related-news alignright block--related-news loading\" data-post-id=\"109559\"><div class=\"block--related-news__image\"><\/div><div class=\"block--related-news__content\"><span class=\"block--related-news__heading\">Recommended<\/span><span class=\"block--related-news__title\"><\/span><\/div><\/a>\n\n\n\n<p>Zhu said rigid MLTs in China have held back the growth of technologies, such as virtual power plants (VPPs), which can efficiently distribute and dispatch energy resources for grids and markets. <\/p>\n\n\n\n<p>VPPs offer a \u201cvery cost\u2011efficient and very innovative solution to fix many shortcomings in the power market\u201d, but they need \u201ca highly liberalised power trading market, which China does not have right now\u201d, said Zhu. Octopus has an advanced VPP platform, <a href=\"https:\/\/octopusenergy.group\/kraken-technologies\">Kraken<\/a>, which has been exported globally. <\/p>\n\n\n\n<p>However, in email exchanges, Octopus confirmed that while Kraken \u201ccould in principle be used in China\u201d, they \u201cdo not have any plans to do so at the moment\u201d. Declining to share details, the company described the technology provided for Bitong as \u201cproprietary trading technology\u201d, \u201csolely focused on improving their trading capabilities\u201d.&nbsp;<\/p>\n\n\n\n<p>\u201cIn any case, bringing in foreign capital and foreign technology\u201d is \u201cdefinitely a good thing\u201d, said Zhu. \u201cThis is the first step toward competition\u201d in China\u2019s rigid market.<br><br>Gao, who oversees major VPP projects in China, said the country has about 15 gigawatts of such flexible capacity. \u201cIf we just talk about technology, we have more advantages and cheaper costs,\u201d he said. China\u2019s <a href=\"https:\/\/www.newenergyera.com\/news\/china-sets-aggressive-targets-for-virtual-power-plants-to-boost-distributed-energy-integration.html\">goal<\/a>, announced last year, is to increase the \u201cVPP-regulated capacity\u201d to more than 50 gigawatts by 2030.<br><br>However, Gao explained that the data regulatory and market environment is China\u2019s main obstacle. Data is the \u201cfuel\u201d for running VPPs, he said, because more data yields more precise electricity price predictions and higher VPP revenues.&nbsp;<\/p>\n\n\n\n<p>He added that limited data disclosure in China\u2019s electricity markets and obstacles to dispatching VPPs are \u201ccurbing profitability and dampening Chinese firms\u2019 motivation to reinvest in platform upgrades.\u201d Since Bitong is no exception in this data environment, Gao questioned whether Kraken\u2019s advantages could be fully demonstrated if used in China.<\/p>\n\n\n\n<p>Gao said the \u201creal impact\u201d is that Octopus \u201cdraws open the curtain\u201d for foreign companies entering China\u2019s electricity market. \u201cForeign companies like Octopus Energy have developed strong business models and proven practices from relatively more flexible markets. These can be adapted domestically, providing real momentum to building China&#8217;s retail electricity market.\u201d<br><br>Aylett said that, from a broader perspective, \u201cincreasing the efficiency of China&#8217;s energy system, and maximising the potential of its renewable deployment, has the potential to massively bring down emissions, which will slow climate change \u2013 benefitting not only China and the UK, but the whole world\u201d.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-next-for-uk-china-climate-cooperation\">What is next for UK-China climate cooperation?<\/h2>\n\n\n\n<p>Over recent decades, UK-China cooperation has evolved from state megaprojects to smaller private-sector deals, said Zhu.<\/p>\n\n\n\n<p>In 2015, state-owned China General Nuclear committed to funding the Hinkley Point C nuclear power station in south-west England, and partnering on the Bradwell B station in east England, during President Xi Jinping&#8217;s <a href=\"https:\/\/www.gov.uk\/government\/news\/uk-china-joint-statement-2015\">UK visit<\/a>.<\/p>\n\n\n\n<p>Bradwell B has <a href=\"https:\/\/www.world-nuclear-news.org\/Articles\/Three-year-extension-agreed-to-Hinkley-Point-C-con\">stalled<\/a> over <a href=\"https:\/\/www.bbc.co.uk\/news\/articles\/cn4w3y4pdkzo\">national security concerns<\/a> and Hinkley has been heavily delayed. A recent proposal from China\u2019s Mingyang Smart Energy to set up an offshore wind factory in<a> Ardersier<\/a> port, north-east Scotland, still awaits UK clearance on <a href=\"https:\/\/dialogue.earth\/en\/energy\/chinas-offshore-wind-companies-seek-a-europe-foothold\/\">safety and security concerns<\/a>.<\/p>\n\n\n\n<p>\u201cBritain has national investment screening\u201d and China is also \u201ccautious about letting Western companies participate in critical infrastructure, or power market trade tied to national livelihoods,\u201d Zhu said.<\/p>\n\n\n\n<div class=\"wp-block-cd-pull-quote block--pull-quote\"><div class=\"block--pull-quote__wrapper\"><blockquote class=\"block--pull-quote__quote\">With so much clean energy now available in China, a freer market to match supply and demand is certainly welcome<\/blockquote><cite class=\"block--pull-quote__cite\">Gao Hongchao, National Science and Technology Major Project<\/cite><\/div><\/div>\n\n\n\n<p>Octopus&#8217;s joint venture puts itself in a \u201cstronger position\u201d, said Aylett, but \u201cit will be interesting to see if other UK energy-technology companies follow Octopus into the Chinese market\u201d.<\/p>\n\n\n\n<p>To scale impact, Octopus and other foreign firms may still need to partner with state-owned enterprises, said Gao, noting only about a third of China&#8217;s electricity investments are \u201cpurely private\u201d.<\/p>\n\n\n\n<p>Overall, Gao said the cooperation is \u201cpleasing to see\u201d. \u201cWe have been conducting <a href=\"https:\/\/chinaenergyportal.org\/en\/opinions-of-the-cpc-central-committee-and-the-state-council-on-further-deepening-the-reform-of-the-electric-power-system-zhongfa-2015-no-9\/\">electricity market reforms since 2015<\/a>. With so much clean energy now available in China, a freer market to match supply and demand is certainly welcome, and Octopus\u2019s arrival boosted investment confidence.\u201d<\/p>\n\n\n\n<p>Aylett said Bitong and Mingyang \u201cbode well for UK-China energy cooperation, especially following the resumption last year of the <a href=\"https:\/\/www.carbonbrief.org\/china-briefing-26-june-2025-first-uk-china-climate-dialogue-china-climate-conference-summary-oil-peak-in-2027\/\">bilateral energy dialogue<\/a>.\u201d<\/p>\n\n\n\n<p>\u201cI would hope the new commercial ventures can support the ongoing technical and policy work under the government dialogues. Of course, we&#8217;ll need to wait and see how successful, and resilient to political tensions, these ventures ultimately prove to be,\u201d he added.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The joint venture has been launched to trade and optimise renewable electricity in China\u2019s spot power markets<\/p>\n","protected":false},"author":50000909,"featured_media":60123956,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[758,757],"tags":[17073,585,600],"hashtags":[],"country":[20000110,50040729],"class_list":["post-60123944","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-energy","tag-energy-transition","tag-renewables","tag-trade","country-china","country-united-kingdom"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.0 (Yoast SEO v26.0) - 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