Bloomberg News, 21 August 2015
China’s wind and solar developers are getting much less than they anticipated in handouts from the government because of a quirk in subsidy policies, threatening to stymie growth in the world’s biggest market for clean energy.
The issue relates to the support China pays power suppliers as enticement to develop clean energy projects. Surcharges slapped onto electricity bills to fund the subsidies are too low, leaving a gap between what was promised and what’s being paid out, said Meng Xiangan, vice chairman of the China Renewable Energy Society, an industry group.
Left to continue, the trend may foreshadow a reckoning for what has become the engine of growth in the global renewables industry. While China’s hunger for energy is unsated, less money flowing to developers could ultimately constrain China’s capacity to generate power from nonpolluting sources.
“This will weaken enthusiasm for investment and go against the development of renewable power in the long run,” Meng said.
Additional delays could ultimately eat into cash flow at companies such as China Longyuan Power Group Corp., China Datang Corporation Renewable Power Co. and others.
About 30 billion yuan ($4.7 billion) to 40 billion yuan may be owed by the government to developers in unpaid subsidies, said Li Junfeng, director general of the National Center for Climate Change Strategy and International Cooperation. Some developers have been waiting since before 2012 for payments they’ve yet to receive, Li estimates.
A fax sent to the Ministry of Finance, which retains responsible for allocating the subsidies, wasn’t answered.
Consumer Impact
“Though the government is working to fill in the shortage in the subsidies, this can’t be done at one kick,” said Gong Siwen, an analyst at Northeast Securities Co. in Shanghai. “The government has to consider the impact on electricity bills after a possible lift in the surcharge.”
The issue could undermine efforts by China’s renewables developers to raise financing from outside China, said Nick Duan, a Beijing-based analyst from Bloomberg New Energy Finance.
China’s wind and solar developers are getting much less than they anticipated in handouts from the government because of a quirk in subsidy policies, threatening to stymie growth in the world’s biggest market for clean energy.
The issue relates to the support China pays power suppliers as enticement to develop clean energy projects. Surcharges slapped onto electricity bills to fund the subsidies are too low, leaving a gap between what was promised and what’s being paid out, said Meng Xiangan, vice chairman of the China Renewable Energy Society, an industry group.
Left to continue, the trend may foreshadow a reckoning for what has become the engine of growth in the global renewables industry. While China’s hunger for energy is unsated, less money flowing to developers could ultimately constrain China’s capacity to generate power from nonpolluting sources.
“This will weaken enthusiasm for investment and go against the development of renewable power in the long run,” Meng said.
Additional delays could ultimately eat into cash flow at companies such as China Longyuan Power Group Corp., China Datang Corporation Renewable Power Co. and others.
About 30 billion yuan ($4.7 billion) to 40 billion yuan may be owed by the government to developers in unpaid subsidies, said Li Junfeng, director general of the National Center for Climate Change Strategy and International Cooperation. Some developers have been waiting since before 2012 for payments they’ve yet to receive, Li estimates.
A fax sent to the Ministry of Finance, which retains responsible for allocating the subsidies, wasn’t answered.
Consumer Impact
“Though the government is working to fill in the shortage in the subsidies, this can’t be done at one kick,” said Gong Siwen, an analyst at Northeast Securities Co. in Shanghai. “The government has to consider the impact on electricity bills after a possible lift in the surcharge.”
The issue could undermine efforts by China’s renewables developers to raise financing from outside China, said Nick Duan, a Beijing-based analyst from Bloomberg New Energy Finance.
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