China made headway on renewable energy in 2009
By Terry Wang
Shanghai. February 22. INTERFAX-CHINA - The policies that China set in motion in 2009 show that the central government is striving to rely more on renewable energy in order to cut back on fossil fuels, improve the environment and address concerns from the international community on global climate change.
In March 2009, the Ministry of Finance and several other ministries announced a program to provide a subsidy of RMB 20 ($2.92) per watt-peak (Wp) for buildings that install building integrated photovoltaics (BIPV) with more than 50 kilowatts-peak (kWp) of installed capacity. The BIPV subsidies marked the beginning of series of new policies designed to jump start the domestic PV market.
In July 2009, China initiated a program dubbed "Golden Sun," under which the government offered to subsidize 50 percent of the costs of large-scale PV power projects. The government initially vowed to subsidize 500 MW of new projects over the following two to three years, but a Ministry of Science and Technology official later said that the program had been expanded to cover 2,500 MW of new PV power plants by 2015.
The government also held the first public tender for a large-scale PV power project in Dunhuang City, Gansu Province. A consortium won the rights to develop and operate the project with a bid of RMB 1.09 ($0.16) for each kilowatt hour of electricity produced by the project.
However, the government does not intend to make the bid the benchmark power tariff for all new PV power projects in the future. From the central government's point of view, it does not want to provide too many subsidies to the PV industry if companies cannot cut costs to the point where they can compete head-on with thermal power plants. What the government wants to see is PV companies prove that solar power makes economic sense so that they can continue to promote the sector.
Nonetheless, the government has shown that it is willing to let the renewable energy sector develop rapidly, including the PV sector, which has already become the largest producer of PV modules in the world. China is already in the midst of revising its renewable energy development plan, which may raise the country' 2020 target for PV power installed capacity to 20 gigawatts (GW) or even 30 GW.
This is in line with the government's announcement that it intends to service 15 percent of its energy demand from non-fossil fuel sources by 2020, and also its vow, made before the Copenhagen conference, to cut carbon intensity by up to 45 percent by 2020. To achieve these targets, China will also have to rely on the development of another important renewable energy source, wind power.
China started developing its wind power sector earlier than its PV sector. In 2009, China added an estimated 12 GW of wind power installed capacity, surpassing Spain as the world's third largest developer of wind power.
The NDRC announced last year that it had created a system of benchmark power tariffs for new wind power projects that is based on the wind resources of various regions. Prior to this change, the government set wind power tariffs by asking companies to bid for the development rights a particular project. These auctions have effectively taught the government how much it can allow wind power operators to charge for the electricity they generate.
The tariff system, however, has also resulted in some blowback from the United Nations Development Programme's Executive Board, which has blocked 10 Chinese wind farms from qualifying for funding through the UN's Clean Development Mechanism (CDM). Nonetheless, the developers of these projects are continuing to work with the UN to get their projects approved.
Some industry insiders have said that the Executive Board might be rejecting Chinese projects, which receive the majority of CDM funding, to spread CDM funds to more countries.
China's rapid deployment of wind farms has a led to other problems. Auxiliary construction, including power grid construction, has not kept up with the construction of new wind farms. This has led to a lot of wasted wind power as wind farms don't have the sufficient power grid connections to transmit their electricity.
China may set a target to have 150 GW of installed capacity by the end of 2020, which would require large-scale of improvements to the country's power grid network. Otherwise, many wind turbines will be left spinning in the wind.