China orders local governments to ease burden on renewable power firms

Source: By David Stanway, Reuters • Posted: Monday, April 30, 2018

SHANGHAI (Reuters) – China has ordered local governments to “ease the burden” on renewable power generators by strengthening guaranteed purchase agreements and giving them priority access to new grid capacity, the National Energy Administration (NEA) said on Thursday.

According to China’s renewable energy law, grid companies are obliged to take on all electricity generated by renewable sources, but many projects have still been left with inadequate grid access, a problem known as curtailment.

The NEA said it would “strictly implement” rules guaranteeing renewable power purchases and would order grid firms to “promptly accept” grid access applications from renewable projects.

For regions that fail to make the guaranteed purchases, the NEA will take action to slow the pace of project construction.

The NEA also urged local authorities to reduce land costs for renewable energy providers and abolish arbitrary charges and unreasonable project approval conditions. Local governments must also pay back illegally collected fees.

Friends of Nature, an environment group, is suing grid companies in northwest China for failing to maximize purchases of renewable power.

It said timely grid access to renewable projects was crucial, but the new measures did not go far enough to ensure China’s clean energy resources were fully utilized.

“Setting a minimum number of kilowatt-hours for renewable power is not the same as buying all of it, as stipulated in the renewable energy law,” said Friends of Nature’s He Miao. “We hope new rules will emerge to implement the law more comprehensively.”

China wasted 41.9 billion kilowatt hours (kWh) of wind power in 2017 as a result of poor grid connectivity, 12 percent of total wind generation. Wasted solar amounted to 7.3 billion kWh, 6 percent of total generation.

The NEA said this week that wind curtailment fell to 8.5 percent and solar to 4.3 percent in the first quarter of this year.

The government is cutting subsidies available to renewable energy providers after a decline in costs over the last decade, but it is looking for other ways to encourage clean energy projects.

The NEA said in the notice that it would encourage financial institutions to increase credit available to renewable energy developers, and would also encourage the issuing of green bonds.

Authorities are also now ironing out the details of a mandatory renewable energy quota system that will compel grid firms and big power consumers to acquire a minimum proportion of electricity from clean sources.

Reporting by David Stanway; Editing by Christian Schmollinger and Matthew Lewis