China orders local governments to ease burden on renewable power firms

SHANGHAI, April 26 (Reuters) - China has ordered local governments to “ease the burden” on renewable power generators by strengthening guaranteed purchase agreements and giving them priority access to new grid capacity, the National Energy Administration (NEA) said on Thursday.

According to China’s renewable energy law, power transmission companies are obliged to take on all the electricity generated by local renewable sources, but many projects have still been left with inadequate grid access, a problem known in the industry as curtailment.

The NEA said in a notice that it would “strictly implement” the guaranteed renewable power procurement system, and it would also order grid firms to “promptly accept” grid access applications from wind, solar and biomass power projects.

For regions that fail to make the guaranteed purchases, the NEA will take action to slow the pace of project construction.

The NEA also urged local authorities to reduce land costs and stop imposing arbitrary charges and unreasonable project approval conditions on renewable energy firms. Local governments have been ordered to pay back fees that have been illegally collected from renewable companies.

Two grid companies in northwest China are currently being sued by an environmental group for failing to maximise purchases of renewable power, causing more than 100 million yuan ($15.80 million) in lost earnings.

China wasted 41.9 billion kilowatt hours (kWh) of wind power in 2017 as a result of poor grid connectivity, 12 percent of total wind generation. Wasted solar amounted to 7.3 billion kWh, 6 percent of total generation.

In data published this week, the NEA said the situation improved somewhat in the first quarter of 2018, with wind curtailment at 8.5 percent and solar at 4.3 percent.

The government is cutting the subsidies available to renewable energy providers after costs have declined over the last decade, but it is looking for other ways to encourage clean energy projects.

The NEA said in the notice that it would encourage financial institutions to increase the credit available to renewable energy developers, and would also encourage the issuing of green bonds.

Authorities are also now ironing out the details of a mandatory renewable energy quota system that will compel grid firms and big power consumers to acquire a minimum proportion of electricity from clean sources. ($1 = 6.3305 yuan) (Reporting by David Stanway; Editing by Christian Schmollinger)