China approved the formal operation of its southern regional power market, a step toward expanding electricity trading and accommodating more renewable generation.

The National Development and Reform Commission and National Energy Administration said China Southern Power Grid Co. and regional regulators should expand the scope and scale of trading, and develop market mechanisms better suited to renewable power, according to a notice published Wednesday.

Electricity consumers should directly participate in market trading, except for users whose supplies are guaranteed under government arrangements, the agencies said. They also called for closer links between the southern market and electricity networks in other regions, which could allow power resources to be allocated over a wider area.

China Southern, which supplies five provincial-level regions, said it had narrowed the settlement period for electricity transactions to 15 minutes thanks to years of pilot trading, according to a statement on Sunday. It said daily volumes had reached as much as 4 terawatt-hours, more than the consumption of the UK, France and Germany combined. Shorter settlement intervals are better suited to wind and solar output, which can change quite quickly.

China has strengthened transmission networks between provinces to better allocate electricity from the interior — home to giant hydropower plants and a lot of intermittent wind and solar generation — to coastal cities. Beijing aims to integrate existing regional pilot markets into a unified national trading platform by 2030, as it seeks to keep the country’s industrial cost advantage via massive production of cheaper renewables.

Southern China has been at the forefront of market reforms as clean power expands. Guangdong, the region’s economic powerhouse, relies heavily on supplies from the neighboring hydro-rich regions of Guangxi and Yunnan, and has been building offshore wind capacity to tame seasonal demand spikes.