A Study on the Pricing Policy of Wind Power in China 2006

 

The report “A Study on the Pricing Policy of Wind Power in China” reviews the development of wind power and the pricing system in China. In particular, it looks at the existing wind concession projects and sums up the lessons learned. The report finds that the current tender system for wind pricing needs to be improved in order to build a fair environment for the wind industry competition. Special attention should be paid to restricting the phenomenon of unreasonably low and unreasonably high wind tariffs, to facilitate the long-term development of the Chinese wind industry.

One of the leading authors of the report, Li Junfeng, Director of CREIA says “wind power is a new industry and it still needs support. The current pricing policy does not match the goal of supporting wind development, and it has to be changed.” The Chairman of GWEC, Arthouros Zervos also points out, “the price volatility and uncertainty caused by the current regulation harms foreign and domestic private manufacturers and developers, who are discouraged by a pricing pressure they cannot sustain.”

The report looks at a number of international practices on wind power pricing policies and put forward 5 principles for the wind pricing policy in China: beneficial for long-term market development of wind power, promoting broader participation, facilitating localization of wind turbine manufacture, encouraging competitiveness of the wind power industry and beneficial for drawing in more investment. Based on these five principles, the report suggests to change the tender system into a feed-in-tariff system for wind power in China. The report also suggests that the prices should be adjusted in a timely fashion, but should always be higher than those for coal-fired power. Moreover, the report encourages self-regulation among wind power companies so that a fair competition environment could be built up.

As a major form of alternative energy, wind power has great potential. Currently, coal-fired power accounts for 75% of the Chinese electricity mix and causes huge environmental problems. The massive uptake of renewable energies, such as wind energy, has become the world trend and is exactly what China has to do. Steve Sawyer, the Climate and Energy Policy Advisor of Greenpeace International says, “China is faced with a great opportunity for developing wind power, but the development relies heavily on an enabling pricing system. It is hoped that this report could provide the basis for discussions on the improvement of the pricing policy for wind power in China.”

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