China Approves 21 GW in First Lot of Subsidy Free RE Projects

China’s top economic planning agency, National Development and Reform Commission (NDRC) yesterday gave nod to the first batch of renewable projects under its new zero subsidy policy.

NDRC gave a go-ahead to 20.8 GW of renewable energy projects that will be developed without government subsidies. Of a total 20.8 GW, the first subsidy-free list encompasses 56 onshore wind farms and 168 solar PV arrays across 16 provinces. The wind farm projects will have a combined capacity of 4.51 GW while the total capacity of the cleared solar schemes is 14.78 GW. Distributed generation renewable energy projects with a combined capacity of 1.47 GW are also in the list.

Solar clearly leads the list as the move is understandable given the current trade war with US and other anti-dumping duties which Chinese solar modules are facing including one in India in the form of safeguard duty.

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However, while announcing its decision, NDRC also urged China’s power/grid companies to secure 20-year power purchase agreements with renewable developers to provide long-term guarantees for the projects. This was a change from an earlier stance as currently most PPAs in the country are renewed annually.

The list of unsubsidized projects follows a series of changes introduced to the renewable sector to move towards zero-subsidy wind and solar by 2020, giving Chinese companies just two years to adjust.

The change in policy is Beijing’s attempt to reduce the country’s devastating renewable subsidy backlog, lately rising to 110bn yuan ($15.9bn) according to the National Energy Administration (NEA). Last month NEA prioritized the approval of subsidy-free wind and solar projects for construction to get the ball rolling. Along with the unsubsidized wind and PV project list, NDRC also named 26 distributed energy power trading pilots, in which distributed wind and solar projects could seek direct deals with electricity end users.

According to data by NEA, the country’s installed solar power capacity at end-2019 was 174.63 GW after adding 44.3 GW in 2018. Wind additions in the past year totaled 20.59 GW, bringing the country’s cumulative to 184.26 GW.