China has launched a major reform in its power sector which will enable renewable energy generators not linked to the main power grid to sell electricity easily.
The National Energy Administration (NEA) recently announced that small and medium-sized renewable energy generators will now be allowed to sell electricity to willing buyers directly. The sale of electricity from distributed projects will be take place only in the regions where power demand is high and ample transmission capacity exists.
Renewable energy projects participating in the pilot trading scheme will be eligible for subsidies, but wind and solar energy projects will receive reduced subsidies as they will get market rates for the electricity sold. Power will be sold from these at existing power trading platforms.
The pilot program will help development in the small and medium-scale renewable energy market which, in turn, will boost investment from small companies that are unable to compete with large renewable energy project developers.
The program may also benefit the power consumers, as it would open up the market to competition among power generators. Power consumers may have wider options to procure electricity which will include healthy competition among suppliers, possibly further reducing the cost of clean energy.
Local generation and consumption would also help the reduction of load on cross-country transmission lines that are responsible to feed to the demand centers of south-east Asia with power generation from wind and solar power projects in the north and northwest.
China has already announced plans to reduce power generation loss due to non-availability of transmission network to large-scale renewable energy projects in the northern and northwestern provinces.
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