9 CHINA’S PROMOTION OF WIND AND SOLAR POWER …
207
100 megawatts. Investors and developers of wind farms were selected
through a competitive bidding process that determined the on-grid tariff.
As incentives, the government waved the import customs tariff and
value-added tax on the equipment and accessories. The “Wind Power
Concession Program” that minimized the risks to investors through
government-guaranteed power-purchase agreements had pushed China’s
wind power industry into a fast-growing stage between 2005 and 2009
when the country’s installed wind power capacity more than doubled
annually in the four years.
Effective since February 2005, China’s Renewable Energy Law stipulates “mandatory grid-connection” in Article 4, Item 14, which local
grids should sign contracts with renewables generators to buy up all of the
power that can be supplied, within the grid’s coverage. The law sounded
like good news but lacked the punitive powers needed to implement
obligatory purchases.
In certain localities, feed-in tariff and other subsidization programs
benefitting regional solar power projects had been experienced before
the central government finally made up its mind to grant nation-level
supports. A bidding process for a 10 MW program in the Dunhuang
region of western China’s Gansu Province resulted in an on-grid price of
1.09 yuan per kWh in 2009. Such a price level at the moment was applicable to local projects in surrounding regions with similar solar resources
and equipment. One year later, in April 2010, the NDRC announced that
four solar power stations in western Ningxia Autonomous Region would
adopt a new price level of 1.15 yuan per kWh, higher than that applied
to the Dunhuang program, the first large-scale solar power generation
program commercialized in China. Despite all these sporadic examples
of regional feed-in tariffs, the central government as well as most local
governments had been reluctant to subsidize solar power generation in
the same manner as they subsidized wind power production until recently,
when the government, in the face of weak external demand and serious
industrial overcapacity at home, had to speed up its policy shift onto the
stimulation of domestic demand.
Diverse On-Grid Tariffs
Despite progress in reforming electricity price mechanisms, including
trials of setting tariffs through competitive bidding processes, China’s
on-grid electricity tariffs are still strictly regulated by the government.
207
100 megawatts. Investors and developers of wind farms were selected
through a competitive bidding process that determined the on-grid tariff.
As incentives, the government waved the import customs tariff and
value-added tax on the equipment and accessories. The “Wind Power
Concession Program” that minimized the risks to investors through
government-guaranteed power-purchase agreements had pushed China’s
wind power industry into a fast-growing stage between 2005 and 2009
when the country’s installed wind power capacity more than doubled
annually in the four years.
Effective since February 2005, China’s Renewable Energy Law stipulates “mandatory grid-connection” in Article 4, Item 14, which local
grids should sign contracts with renewables generators to buy up all of the
power that can be supplied, within the grid’s coverage. The law sounded
like good news but lacked the punitive powers needed to implement
obligatory purchases.
In certain localities, feed-in tariff and other subsidization programs
benefitting regional solar power projects had been experienced before
the central government finally made up its mind to grant nation-level
supports. A bidding process for a 10 MW program in the Dunhuang
region of western China’s Gansu Province resulted in an on-grid price of
1.09 yuan per kWh in 2009. Such a price level at the moment was applicable to local projects in surrounding regions with similar solar resources
and equipment. One year later, in April 2010, the NDRC announced that
four solar power stations in western Ningxia Autonomous Region would
adopt a new price level of 1.15 yuan per kWh, higher than that applied
to the Dunhuang program, the first large-scale solar power generation
program commercialized in China. Despite all these sporadic examples
of regional feed-in tariffs, the central government as well as most local
governments had been reluctant to subsidize solar power generation in
the same manner as they subsidized wind power production until recently,
when the government, in the face of weak external demand and serious
industrial overcapacity at home, had to speed up its policy shift onto the
stimulation of domestic demand.
Diverse On-Grid Tariffs
Despite progress in reforming electricity price mechanisms, including
trials of setting tariffs through competitive bidding processes, China’s
on-grid electricity tariffs are still strictly regulated by the government.