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! Read the full story
Its been a HUGE week for solar. Bidding details on the first solar farm concession were announced, while a new solar roofs program to popularize photovoltaics (PV) in rural and urban areas has been launched. The Green Leap Forward discusses the details both developments and their implications to China’s domestic solar market.
Over the past weekend, some important news has emerged from China’s first ever solar concession bidding project in the deserts of Dunhuang, Gansu province (pictured, right). Previously, we erroneously reported that there were 50 bidders for the 10 megawatt solar photovoltaic project (shame on you Xinhua News! It seems that 50 more likely refers to the number of bidding packages that were initially requested from the authorities by potential bidders, not the number of bids actually submitted). In fact, was officially announced that only 18 bids were submitted, and even then, five of those submitted (all from private companies, including three solar manufacturers) were disqualified for not meeting technical requirements. Of the remaining 13 bids, 12 are state-backed and active wind developers and only one is a private company based in Hong Kong. Still, 13 bids provides some healthy competition, as reflected in the surprisingly low range of tariff rates proposed by the bidders. According to a note by the Beijing office of New Energy Finance (NEF): Read the full story
Energy Price Reforms
NDRC announced that it would be removing price caps on coal from next year in a move towards a more market-driven price mechanism. This move comes at an opportune time when coal prices have dropped by 30 to 40% since the summer, but GLF points out an earlier post (see finding #4) on a recent MIT coal report that suggests the upstream coal industry has already moved towards a de facto market price system. Although the NDRC move “is a step in the right direction,” Huang Shengchu, president of Beijing-based China Coal Information Institute says in this interview that government macro-control is still needed to protect the rights of various coal stakeholdres in their contractual dealings with each other, accerlarate industry consolidation of the many small and inefficient mines and to set up a coal price index.
Separately, the proposed auto fuel price reform kicked in earlier than expected. So it turns out that the answer to our confusion (see earlier post) of how the government proposed to hike up taxes and keep fuel prices even was that they would adjust the base fuel price downward, predicated on Read the full story