By Julian Wong Jun.4.2009
In: solar

Wall Street Journal blows story on China solar feed-in tariffs

It seemed too good to be true.  I had barely completed my own “3 trillion reasons” dance when I receive an email with a link to this Wall Street Journal report which suggested to me that the Chinese government had read and taken to heart the policy prescription of my solar policy article.  WSJ said:

China said it will introduce a preferential tariff it will pay energy companies that use solar power for their generating capacity, as part of the government’s push for greater use of clean technology.

The preferential tariff — the price that China’s two state-owned electricity transmission and distribution companies will pay energy companies for their solar power — aims to make solar power competitive against traditional fuels, such as coal, which accounts for two-thirds of China’s electricity.

Shi Lishan, vice director of the National Energy Administration’s Renewable Energy Department, said the tariff will be 1.09 yuan (16 U.S. cents) per kilowatt hour for solar power that is supplied to the grid. Coal-fired power generation needs a tariff of just 0.3 yuan per kWh to be profitable.

For a moment, I was in solar heaven.  But alas, all that glitters is not gold!  As a blogger on China issues, I learned early on never to rely solely on the western press for news on energy developments in China.   It is just too complex a task–covering the energy industry AND in China.  Its hard enought for reporters to navigate even just one of those two fields.

Anyways, I digress.  The WSJ would have you believe that the feed-in tariff is a nationwide tariff that will spur and explosion of new solar projects.  They don’t actually claim it would be nationwide, but they certainly say nothing to dispel that notion.  Turns out, the articles leaves out important details.  A check on the Chinese-language reports, such as this, tells a fuller story–the feed-in tariff rate is correct, but it applies only for the 10 MW project at Dunhuang, which we reported in this blog in March.

In fact, we should be skeptical of any news that claims that there would be a national, one-size-fits-all feed-in tariff.  Julia Wu, a solar analyst at New Energy Finance in Beijing explained in an interview with GLF:

Different regions have different solar resources.  China will probably set different feed-in tariffs for photovoltaic projects in different regions based on the results of biddings, which would reflect the local solar conditions.

Speaking of biddings, the Chinese article explains that no official winner for the Dunhuang project has been declared to this day because of the concern that large government owned companies were underbidding at nonprofitable tariffs (the lowest bid was 0.69 yuan per kwh by a joint bid by SDIC Huajing and Yingli Green Energy) just to ensure success in the bidding process and  shore up their green credentials.  But the word on the street (or in the press) is that Guangdong Nuclear Energy is the front runner.  Guess what their submitted bid was?

1.09 yuan per kilowatt hour.

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  1. | FT Energy Source | Counting on increased Chinese solar subsidies Jun.23.2009@5:52 am Reply

    [...] China has earmarked 350m RMB for green projects in its stimulus package, but details on exactly how much will go on truly green projects are difficult to pin down. China’s support for solar has so far been fairly limited; subsidies introduced in March only covered rooftop installations, and reports earlier this month of Chinese government introducing feed-in tariffs apparently only concerned one 10MW plant. [...]

  2. Think Green Alliance » Blog Archive » China Sets 15% Renewable Energy Target, Ups Ante on U.S. -- 75 Members Strong Jul.9.2009@5:17 pm Reply

    [...] roofs. These rebates cover roughly half the cost of such systems. Chinese officials also plan to enact a feed-in tariff   of $0.16 per kWh produced to further incentivize uptake of rooftop [...]

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