China to cut on-grid tariffs for solar, wind power

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China will cut payments to wind and solar electricity generators for contributing power to the grid, the country's state planning commission said.

BEIJING: China will cut payments to wind and solar electricity generators for contributing power to the grid, the country’s state planning commission said over the weekend, reflecting recent declines in operating costs.

Starting in 2016, on-grid tariffs for solar producers will be 0.02 to 0.10 yuan lower per kilowatt-hour — with the higher cuts applying in the country’s less populated, arid western region — while tariffs for wind power generators will fall 0.02 to 0.03 yuan, the National Development and Reform Commission said in a statement.

The cuts, which were expected, are in line with a 0.03 yuan cut on Wednesday to on-grid tariffs for thermal power. Coal still fires more than 70% of China’s power generation.

“This is positive for rooftop solar,” said Rosie Pidcock, senior business development manager at UGE International, a New York-headquartered rooftop solar developer operating in China, noting the biggest impact would fall on utility-scale developers, who have mainly built solar farms in the country’s west.

The cost of installing panels was still set to fall in 2016, Pidcock said, and the cuts were not enough to push companies into the red. China is trying to reduce its dependence on fossil fuels that are contributing to choking smog. The city of Beijing declared two pollution “red alerts” this fall. Local governments have also been increasing the subsidies that solar producers have come to rely on, particularly in the country’s eastern half, where solar has struggled to take off.

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