In order to transform the electric power industry from the traditional vertical integration monopoly business model to a competitive market structure, traditional power enterprises in many countries have been broken into independent power producer (IPP), electricity transmission companies, electricity distribution companies and electricity selling companies so to optimize the allocation of resources and maximize social benefits. Among these, IPP are independent legal entities subject to independent accounting assessment and enjoying full autonomy of management.

In General, IPP are granted net metering rights from the State Grid Corporation through bidding, recoups the costs and makes reasonable profits by selling electricity. After winning the bid, the IPP will first sign a power purchase agreement (PPA), and a land lease agreement with the government, and then proceed to procure approval for the environmental impact assessment (EIA). After that wards, the top priority will be project financing. Under normal circumstances, banks will require a 15%—30% equity for any loan request. The development and construction of the whole project can be launched after procuring Sovereign Guarantee (the government guarantees to purchase the electricity generated by the project).