Does Electricity Marketization Reform Promote Green Electricity Generation? A Quasi-Natural Experiment of China’s Electricity Spot Market Pilot

Persistent supply–demand mismatches pose major obstacles to deploying green electricity. As a critical marketization reform instrument, the electricity spot market (ESM) is expected to optimize power resource allocation. This paper examines whether ESM pilots contribute to the growth of green electricity generation, and further tests their moderating role in the relationships between urbanization, industrial structure, and green electricity generation. To this end, we treat the ESM pilot as a quasi-natural experiment and employ a difference-in-differences (DID) model to empirically assess the impact of the ESM on green electricity generation, using provincial data from 1998 to 2021. The results show that establishing the ESM significantly promotes green electricity generation. This positive impact remains robust across a series of robustness checks, including parallel trend tests, alternative regression approaches, variable re-measurement, and placebo tests. Further mechanism analysis confirms that the ESM enhances green electricity generation by reducing government intervention and reshaping the energy consumption structure. Additionally, our analysis of moderating effects reveals that the ESM helps mitigate the negative impacts of urbanization and the expansion of secondary industries. These findings provide empirical implications for emerging and developing economies on using market reform to ease electricity constraints and scale up green electricity generation.