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Chinese Solar Stymied By Approval Costs, Shi Yuzhu Argues

One of China’s wealthiest men has taken to Weibo (the Chinese version of Twitter) to complain about the exorbitant cost of obtaining approvals for large-scale solar power projects in the country.

Shi Yuzhu recently claimed on his personal Weibo account that for a 1-gigawatt solar project in China, the cost of purchasing official government approvals could run as high as 400 million yuan (approximately $64 million).

“This year construction capital for 1GW has been arranged… yet completion is very difficult because it’s too hard to obtain approvals,” wrote Shi on Weibo.

Shi further complained about the control of approvals by provincial authorities who all too frequently issue them to re-sellers instead of granting them directly to legitimate clean energy concerns.

“Approvals are allocated by local governments, the majority of which are given to those who have no money for construction or are sellers of the approvals. Those with capital and technology frequently are unable to obtain them, and must buy approvals (1GW requiring 400 million yuan),” wrote Shi.

Shi Yuzhu is one of China’s wealthiest men, ranked as the 32nd richest person in Mainland China and the 408th richest in the world according to the Hurun Report’s Global Rich List for 2014.

While Shi originally made his fortune in computer hardware and online gaming, he has since turned his attention to the more pressing issue of fostering the development of China’s clean energy sector.

Shi obviously believes he wields sufficient clout as one of China’s wealthiest men to shake up the approvals system by means of public, online censure, and has indicated his refusal to purchase approvals from re-sellers.

“Our companies in Inner Mongolia, Ningxia, Qinghai and Xinjiang have obtained very few approvals at present, but we are determined not to purchase them [from re-sellers.]”

The approvals to which Shi refers go by the name of “lutiao” in Chinese, and are documents issued by China’s province-level development and reform commissions that give the go-ahead to preliminary development work for solar power projects – chiefly in the form of a raft of feasibility studies and environmental impact reports.

Members of China’s renewable energy sector have long complained that the delegation of the issuance of approvals for solar power projects to province-level governments has created a situation in which the documents are widely traded between both state enterprise and private companies for a profit, instead of being used directly by recipients for their own investment projects.

China’s National Energy Administration sought to deal with the problem towards the end of the last year with the issuance of two government circulars on 13 October 2014 – “Resolutely Preventing Speculative Behavior Prior to the Start of the Operation of New Energy Projects” (坚决制止新建电源项目投产前的投机行为) and the “Prohibition on the Purchase and Sale of Project Documents and Related Rights and Interests” (禁止买卖项目备案文件及相关权益).

 
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Written By

is an Australian trade journalist and technical translator with a keen interest in trends and development in the global energy sector, and their ramifications for economic growth in the future. He spent most of the noughties as resident of the greater China region and is literate in both Mandarin and Classical Chinese. Marc’s avocational interests include distance running, French literature, economic history, European board games, and submission grappling.

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