China’s government approved the first of its long-awaited grid-parity renewable energy projects for 2019 this week, which include 4.5 gigawatts (GW) of wind and nearly 15 GW of solar PV.
It has been a challenging 12 months for China’s renewable energy industry, particularly its solar sector, as the country’s government has sought to pave the way for subsidy-free, grid-parity renewable projects. China’s National Energy Administration announced plans earlier this year aimed at providing political, rather than financial, support to drive subsidy-free projects through providing political certainty.
“This signals a permanent policy shift towards zero-subsidy renewables,” explained Jonathan Luan, an analyst with Bloomberg New Energy Finance who spoke to me via email in January regarding the NEA’s plans to push the development of subsidy-free renewable energy projects. “Though the industry suspected it coming after the May 2018 announcement applying breaks to the subsidy flow, the new policy clearly steered the market to a new direction. The two-year policy window should stimulate new build. We are more inclined towards the optimistic scenario of our 34-44GW solar forecast for 2019.”
The NEA provided further political clarity in April when it outlined plans to prioritize construction of unsubsidized solar PV projects ahead of any projects that require or apply for subsidies. The long-term goal, according to the Asia Europe Clean Energy (Solar) Advisory (AECEA), is to see solar be subsidy-free in 2021.
Writing to journalists this week, the AECEA’s Director, Frank Haugwitz, confirmed that China’s National Development and Reform Commission (NDRC) and National Energy Administration have approved 20.76 GW of wind and solar projects. The total amount includes 4.51 GW of wind, 14.78 GW of solar PV, and 1.47 GW of so-called “distributed trading pilot projects.”
Interestingly, according to the AECEA, the average project capacity is around the 90 MW mark — surprising, considering that grid-parity projects were in the triple-digit megawatt range, often sitting between 200 MW and 300 MW, and as large as 700 MW. According to Frank Haugwitz, the sub-100 MW average could have been influenced by 2018’s erosion of solar module pricing.
A large number of the projects awarded this week will apparently not be grid-connected and operational by the end of the year, but will rather stretch into mid-2020, early-2021, and even in some cases into 2023 — such as a 300 MW project in the Guangxi Autonomous Region in the country’s south-east.
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