China has said it will not approve wind and solar power projects unless they can compete with coal power prices.
Beijing pulled the plug on support for large solar projects, which had been receiving a per kWh payment, in late May. That news came immediately after the country’s largest solar industry event and caught everyone by surprise.
Officials are understood to have been frustrated at seeing Chinese suppliers and engineering firms building solar projects overseas that delivered electricity at prices far below what was available back home.
The country also has its own issues with grid logjams. These have caused power from wind and solar projects to be wasted due to a lack of capacity on the network to transmit and distribute it. In 2017 12% of wind generation and 6% of solar was curtailed.
In the plans announced on Thursday, the National Development and Reform Commission (NDRC), the top strategic planning authority, and the National Energy Administration (NEA) set out a series of conditions under which new solar and wind projects would be approved from now till the end of 2020.
Chief among these is that the price matches or undercuts the national coal benchmark, something that happened for the first time ever just last month.
Projects will also have to show that the grid can handle their output. Technical specifications will ensure that the highest standards are met on that front.
Local governments have been told they are free to offer their own subsidies to projects if they wish.
In the past, provincial authorities have spent heavily to bankroll uncompetitive solar manufacturers.
Thursday’s announcement warned that any attempt to use project subsidies to invest in “local factories” or to make the use of locally made components a condition of the subsidy.
h/t to The GWPF