9 CHINA’S PROMOTION OF WIND AND SOLAR POWER …
209
projects completed before the end of 2011 (NDRC 2011). Currently,
on-grid tariffs for wind, solar PV and even nuclear are in a downward
trajectory due to the sharp decline in related power production costs,
while the government is considering the possibility of raising on-grid rates
for hydropower or thermal projects to rebalance the competition in favor
of conventional power sectors.
Since 2008, the Chinese government has adopted a set of preferential
pricing schemes to encourage wind power generation. The tariff for wind
power was fixed by the NDRC in 2009 and classified into four levels to
give differentiated support to projects located in different regions that
vary in local wind resources.
Solar PV. Prior to 2009, when the solar power market was small, the
approved feed-in tariff rate ranged between four to nine yuan per kWh
based on the different characteristics of individual projects, ten to twenty
times that of coal power. The exorbitant cost of producing on-grid solar
power, together with enormous cost disparities among projects in various
localities, meant that the government had refused to adopt the fixed
feed-in tariff, which policy makers thought would lead to over-capacity
and costly production in some regions. In 2010, grid companies received
government subsidies of 5.3 billion yuan for purchasing power from wind
power generators, while they only got 63 million yuan and 83 million
yuan in subsidies when buying electricity from solar and hydropower
plants (China’s State Electricity Regulatory Commission 2011, p. 10). 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 was applicable then 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.
In 2011, the Chinese government introduced a nationwide feed-in
tariff of 1 yuan per kWh, which offered above-market-price contracts for
the generation of solar electricity. Against the backdrop of exacerbated
solar PV overcapacity and the launch of antidumping and countervailing
duty investigations by the United States and EU over China-produced
PV products, the Chinese central government planned to give additional
209
projects completed before the end of 2011 (NDRC 2011). Currently,
on-grid tariffs for wind, solar PV and even nuclear are in a downward
trajectory due to the sharp decline in related power production costs,
while the government is considering the possibility of raising on-grid rates
for hydropower or thermal projects to rebalance the competition in favor
of conventional power sectors.
Since 2008, the Chinese government has adopted a set of preferential
pricing schemes to encourage wind power generation. The tariff for wind
power was fixed by the NDRC in 2009 and classified into four levels to
give differentiated support to projects located in different regions that
vary in local wind resources.
Solar PV. Prior to 2009, when the solar power market was small, the
approved feed-in tariff rate ranged between four to nine yuan per kWh
based on the different characteristics of individual projects, ten to twenty
times that of coal power. The exorbitant cost of producing on-grid solar
power, together with enormous cost disparities among projects in various
localities, meant that the government had refused to adopt the fixed
feed-in tariff, which policy makers thought would lead to over-capacity
and costly production in some regions. In 2010, grid companies received
government subsidies of 5.3 billion yuan for purchasing power from wind
power generators, while they only got 63 million yuan and 83 million
yuan in subsidies when buying electricity from solar and hydropower
plants (China’s State Electricity Regulatory Commission 2011, p. 10). 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 was applicable then 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.
In 2011, the Chinese government introduced a nationwide feed-in
tariff of 1 yuan per kWh, which offered above-market-price contracts for
the generation of solar electricity. Against the backdrop of exacerbated
solar PV overcapacity and the launch of antidumping and countervailing
duty investigations by the United States and EU over China-produced
PV products, the Chinese central government planned to give additional