China Requires Utilities to Buy All the Electricity Generated By Renewable Energy Companies
This weekend the main Chinese legislature adopted an amendment to the renewable energy law, requiring that utilities must buy all the electricity produced by renewable energy generators. Utilities refusing would be fined up to an amount double that of the economic loss of the renewable energy company.
The big question is: for how much? Whether this would create a boom in renewable energy in China will depend on how much money companies could earn in the sales. So far, this figure is not in the news reports. This amount paid per kilowatt-hour produced is the key to the success or failure of Feed-in Tariffs to generate more renewable energy.
As we have seen with Feed-in Tariffs in other countries; when the price paid per kilowatt is too low, as it is in California, nothing happens. If it’s too low, it won’t act to spur the “electranet” that Al Gore proposed; which would have all of us making money off our rooftop solar arrays while contributing power to the grid.
California’s Feed-in Tariff averages out to only about the retail price of electricity, about 19 cents. This has proved not enough of an incentive to investors, with the result that few people even know it exists.
By contrast; in Germany it has been as high as three times the retail rate and spurred such a race to install solar, that by the end of last year Germany was literally running out of solar panels. The generous payments grew Germany from 44 megawatts in 2000 to 1,260 megawatts by 2007, and it is now phasing down. Spain’s 2007 Feed-in Tariff was so ambitious that it destabilized the global solar industry.
Coming on top of China’s dispatch in getting its grid simplified into one nationwide grid suited to carrying renewable energy in a mere two weeks, though ( which we in the US are unlikely to be able to achieve in two centuries, so Balkanized are all our grids), this startling move is worth watching. How generous China’s FiT turns out to be will have ramifications for the world economy.
Depending on the pricing; this law could spur burgeoning growth in renewable energy in China. Certainly, it will spur the development of storage options and intermittency-prevention innovations, like pumped storage, CAES, and so on. Uncoordinated growth in renewable energy could create a grid-management disaster.
Already, some of the rocketing investment in wind is currently wasted as China has lurched into huge renewable projects without the storage or spacing needed. Ideally, wind farms need to be spaced out over large areas to ensure constant supply.
This live-and-learn environment, though, is refreshingly speedy compared to our own bogged-down legislative process, battling opposition from too many “global-warming-is-a-hoax” Senators on the Right as well as environmentalists on the Left dwelling on desert animals while losing sight of the big picture: the urgent need to reduce fossil fuel use.
Despite its behavior at Copenhagen, China has actually done far more so far than any other nation to reduce greenhouse gases, with its draconian but effective One Child policy. Watch China’s actions, not its words.
Image: Flikr user twenty questions
Source: Xinhua
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December 26th, 2009 at 10:51 pm
People will be blaming China for everyone that goes wrong in their lives for decades to come, it hardly matters what China does or not do. Rest assured though building grand national projects are a Chinese cultural “thing”, and switching the country to renewable energy is one of them. They have the capacity to make it happen, just like they had the capacity to build the great wall.
December 27th, 2009 at 5:04 am
Green energy in China, like most things, will have its growing pains. But if any country can act, it is China. If transmittion is a problem, no country can act as fast as China to solve it. When China want to do something, damn the cost, it will be done!
One of the story in Mao’s little red book was ” The foolish old man that moved the mountain” I thought it was only a story. I moved from my home village when I was 13 years old. My village was situated in a wilderness area. There was a stream in front and a mountain behind. Last year, I visited my village after 54 years. I could not recognize it. The stream was replaced be an irregation cannel. The mountain behind the village was replaced by a farm.
December 27th, 2009 at 7:14 am
Will be interesting to see the terms and amount of the chinese FIT.
Time will tell and the amount and details will determine the significance.
December 27th, 2009 at 9:12 am
If you fully account for the cost of energy, which would have to include issues like pollution, resource depletion and national security, there should be a premium placed on the value of renewable energy.
Unfortunately, the United States is (for the most part) unable, unwilling or simply under the thumb of energy companies and has yet to act in this manner.
December 28th, 2009 at 1:17 pm
True. How much effect this has on global emissions reduction, depends entirely on the price paid per kwh.
If its 3 x retail like Germany’s was – JUST HUGE! Worldchanging.
December 28th, 2009 at 2:45 pm
Germany is not a good example for PV despite the huge amount of money spent on it ($70 B) and the large payment per kWh.
Their ten years of effort now contribute just 0.35% (one third of a percent) of the electricity by PV.
You talk about installed kW- you should talk about actual electricity generation. The average kWh per kW installed is a meager 750 kWh per year in Germany. The wrong green technology for them. Their wind energy is useful there because it produce considerably more ACTUAL ELECTRICITY. Seven percent of their electricity comes from wind.
Note also that while every one is pointing to Germany’s large PV installation the amount of coal generated electricity, now 50%, is increasing rapidly. They are sneaking coal in the back door while our eyes are blinded by the “magic of PV”.
WE must concentrate on cutting GHG as soon as possible, not on specific technology. Concentrate on cutting our wasted energy by conservation and efficiency- every kWh we cut 3 kWh of input energy.
The market place will determine which technology will be widely used since governments do not have unlimited funds to support uneconomical technologies.
See more of the practical,realistic side of alternative energies on : ginosaronglobalwarming.org
December 28th, 2009 at 7:59 pm
But China has a lot of great insolation, unlike Germany.
December 28th, 2009 at 10:26 pm
Dave B,
Having lived in China for 8 years, I can tell you that China south of Beijing generally has no insulation, so power consumed by air conditioning and heating (usually out of the same appliance called cong tiao) is wasted at a very, very high rate.
Most buildings are made out of concrete or brick as well, which do not do a good job of keeping out the cold.
China’s two greatest challenges are that its two defining internal market characteristics are incompetence and corruption. The hurdles are large, but can be dealt with, and as usual, the challenge itself is a job/wealth creating opportunity the Chinese are eager to capitalize on.
December 28th, 2009 at 10:53 pm
Steven, that’s an interesting perspective; too bad.
But Dave is talking about solar potential: “inSOLation” refering to how good the sun potential for solar power is there.
I’d think there’s pretty sizable desert areas in China which usually corelates to good solar potential.
December 31st, 2009 at 9:13 am
Though not perfect, this certainly seems like a step in the right direction. I read a National Geographic article yesterday (from April 2009) that stated China is building the equivalent of 2 medium sized coal burning power plants per week. Hopefully steps like mandating purchase of all renewable energy will help them move away from coal generated power.
January 1st, 2010 at 4:53 pm
Susan, almost every country have some solar radiation and opportunity for electricity generation. The question is what should we focus on. We must focus on cutting GHG ASAP, not on technologies. We do not know at hour home what is right technology-wise for the country.
I am a senior electrical engineer and I can not tell you what would be our eventual power mix- the market place will decise after we tax fossil fuels at high enough levels.
We are in a very serious danger because of GW. We need to use clear thinking and reduce our emotional attachments to “magical” things, such as PV.
In high desert locations industrial PV, as solar high tower, may be useful when the total cost goes down further, but not on individual homes where the sellers often lie to us promising much higher output than possible and installations and maintainance are costly and poor.
January 1st, 2010 at 6:06 pm
Solar PV is science, it is not magic.
Most places, like here in California for example, an independent assessment of solar output by the state must determine that the solar is producing what the seller says it is producing, before the California Feed-in-tariff (or solar rebate)is paid by the state.
Solar estimators can check their calculations for output here:
http://www.csi-epbb.com/default.aspx
The same kind of independent assessment such as the California Solar Initiative Estimated Performance Based Buydown (CSI-EPBB) would be necessary in China.
In any case -this new rule in China would apply to any renewable source, such as wind OR solar or etc, depending on local best options.