(EnergyAsia, May 31) — China’s new pricing regulations for windpower generated energy could hurt private company initiative, leaving the field to the state-owned power sector, said US-based World Watch.
The new regulation, issued earlier this year by China’s National Development and Reform (NDRC), stipulates that windpower pricing be set through a public tendering process. This process, critics say, is generating great uncertainty and it reduces windpower investors’ ability to control risks and thus reduces their incentive to invest in this nascent industry.
Xu Hongliang, general manager of China Fulin Windpower Development Corporation, told World Watch that the regulation will “throttle the whole industry.”
Critics said the tendering process did not work well when used in awarding concessions in 2003. All but one concession were awarded to state-owned power companies, with the winning bids ranging from 4.6 to 6.5 cents per kWh. That compares to an estimate cost range of 6.3 to 8 cent per kWH, meaning that the projects are writing losses, an unattractive proposition for private investors.
State-owned companies are jostling for wind power concessions because they expect China’s new Renewable Portfolio Standard (RPS), which is still under deliberation, will require them to meet specific renewables targets as China aims to ensure a greater share of renewable energy in its electricity portfolio.
At the same time, these companies are wooing NDRC decision makers for large hydropower and coal power projects, from which they make the lion’s share of their profits.
Helped by close ties with China’s state banks, they have an advantage over private enterprises in obtaining bank loans, regardless of the profitability of their projects.