Page 11 - AsiaElec Week 24 2021

AsiaElec RENEWABLES AsiaElec

China’s NDRC confirms end

to some green subsidies

CHINA CHINA’S National Development and Reform China is at the centre of global renewable
Commission (NDRC) is planning to end sub- demand and supply, accounting for around 40%
sidies for some new onshore wind projects, of global renewable capacity growth for several
concentrated solar power (CSP) schemes and years, the International Energy Agency (IEA)
distributed solar PV projects for commercial use. said.
The country’s influential planning body said In 2020, China’s share rose to 50% for the first
that the falling costs meant that renewables could time due to a rush to complete projects before
now compete price-wise with coal-fired electric- government subsidies were phased out.
ity, making subsidies unnecessary, S&P Global In 2021-22, renewables growth in China is
Platts reported. set to stabilise at levels that are below the 2020
An end to support for some green projects record but still over 50% above where it was dur-
will also reduce the subsidy burden for the cen- ing the 2017-19 period.
tral government, which has fallen behind in sub- In recent years private capital, which poured
sidiary payments in recent years. funding into the renewables space in China, has
The decision means that electricity generated been hurt by delayed subsidy payments, pushing
from these green projects will be sold at either more and more of the industry to become con-
local benchmark prices, which are set compared centrated with state-owned enterprises (SOEs).
to coal-fired power, or at market prices, the Wu Yuehao, associate director for Infra-
NDRC said. Participation in electricity trading structure Ratings at S&P Global Ratings, said
will be voluntary. the state-owned power developers “will have to
New projects currently in the pipeline will think hard about how they could enlarge their
also not receive subsidies. assets without impacting their leverage that
However, the NDRC said that it wanted pro- much” as the subsidy regime gets phased out at a
vincial governments to develop local support time when their decarbonisation targets are only
systems for renewable projects to ensure that getting tougher.
wind and solar development for both residen- “Remember five generation groups (Big 5)
tial and commercial use still develop in a stable have about 45%-55% of the national power gen-
manner. eration share. Given the carbon policy by Presi-
For example, the NDRC said provincial gov- dent Xi, it’s naturally obliging them to make the
ernments could now set prices for offshore wind shift to make the overarching goal a reality,” she
projects and solar thermal power generation said.
projects. For renewables equipment producers, it’s
Delayed subsidy payments resulted in arrears a mixed picture with the central subsidy gone,
of over CNY300bn ($46bn) at the end of 2019, as project developers will have to push for more
according to Ratings’ report in April. reasonable equipment prices, but the demand
The report also said the levelised cost for coal- will compete with limited supply, Wu said, add-
fired electricity in China now ranges from $50- ing that the commodity super-cycle is partially
66 per MWh, while it is highly competitive with caused by decarbonisation efforts as lots of wind
$41-62 per MWh for onshore wind, and $29-59 and solar farms are waiting to be built.™
per MWh for solar (fixed-axis photovoltaic).

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