The announcement is part of a reply on Tuesday from the National Development and Reform Commission (NDRC) to the State Grid Corp which proposed a draft trading rule on cross-region spot power trading.
The NDRC did not disclose the details of the proposed trading rule.
China, the world's biggest greenhouse gases emitter, has been striving to boost renewable power consumption as it has vowed to bring its carbon emissions to a peak by 2030. Currently, more than 60% of electricity comes from coal-fired power plants.
As renewable power sources are mainly in the far-west part of the country, thousands of kilometres away from the major power consumers, the government is keen to encourage cross-region power trade.
In 2020, cross-province power trading reached 558.75 billion kilowatt-hours, about 17.6% of China's total power trading, according to data from China Electricity Council.
(Reporting by Muyu Xu and Shivani Singh; Editing by Kirsten Donovan)