China is considering cutting benchmark electricity prices paid to utility-scale solar projects by as much as 18% amid efforts to let the renewable energy become a more competitive source of power, according to people familiar with the matter.
Prices for 2020 may be lowered to between 0.33 yuan ($0.05) and 0.47 yuan per kilowatt hour, the people said, citing a request from the National Development & Reform Commission for feedback on its proposal. NDRC, China’s central economic planner, didn’t immediately respond to a fax from Bloomberg seeking comment.
China is easing financial support to the solar industry as it pushes for renewable energy to compete economically with conventional fuel sources such as coal and natural gas. The benchmark prices will set the upper limit for developers bidding to build subsidized projects, a mechanism introduced by the government to rein in hefty subsidy bills that followed a green energy investment boom.
Citigroup Inc. said the proposed tariff reductions were within expectations, according to a Feb. 12 note, which cited local media reports on the cuts. Solar projects are less reliant on subsidies due to falling investment costs, analysts including Air Ma wrote.
The bank predicts an installation rush in the second quarter following a construction delay in the first three months due to the coronavirus outbreak. Projects that bid for 2019 quotas will need to be completed by the second quarter to qualify for subsidies, Citigroup said.
Source : bloombergquint
