China Renewable Energy Law and Development Plan APEC renewable energy experts group meeting China Renewable Energy Law and Development Plan Li Junfeng Energy Research Institute & China Renewable Energy Industry Association October 9-11, 2006 Zhuhai, China

Outline China Renewable Energy Law Implementation regulations under the law China Renewable Energy Development Plan 2019/4/9

China Renewable Energy Law 2019/4/9

Milestones In June 2003, the draft was listed in the legislation plan by National People’s Congress On Feb 28th 2005, approved by National People’s Congress Effective on Jan 1st, 2006 On Jan. 12th, a news-release meeting was held for announce the effective of the Law and implementation regulations 2019/4/9

Mechanisms classified in the RE Law Establishing national targets Grid connection priorities Classifying tariffs for Renewable Power Sharing cost at national level Renewable energy special fund Policy on favorable credit and favorable tax treatment 2019/4/9

Implementation Regulations Under RE Law 2019/4/9

Milestones On April 5th 2005, 6 commissions and ministries of National People’s Congress and State Council organized Meeting on Implementation of RE Law jointly Definite 12 tasks for regulations’ formulation Agreement achieved: major regulations would be issued by the end of year 2005 2019/4/9

Tasks for regulations’ formulation (1)Make the decision for hydro power how to be applicable for the RE Law (2)Study and establish the technology criterions for renewable energy resource investigation (3)Study and establish national middle and long-term target of the total volume for the development and utilization of renewable energy. In second paragraph, the related departments of the State Council with the local people’s government of province, municipality and the municipality directly under the Central Government develop the local renewable energy development middle and long-term target (4)Develop the national plan for the development and utilization of renewable energy. The Energy Authority of the local people’s government of province, municipality and the municipality directly under the Central Government is responsible for the local plan of the development and utilization of renewable energy (5)Study and establish the Guide Lines for the Renewable Energy Industry Development 2019/4/9

Tasks for regulations’ formulation(2) (6)Study and establish the technology standards on renewable energy power grid connection and other national standards on renewable energy technology and product which need uniform requirement in the national level (7)Study and establish the economic technology policies and technical criterions on integrating building with the solar utilization system (8)Study and establish the concrete methods for providing financial supports to the related renewable energy utilization projects in rural regions (9)Study and establish the grid connecting electricity price for the renewable energy power generating projects (10)Study and establish the concrete method for the national cost sharing to the grid connecting electricity payments for the renewable energy power generating projects (11)Study and establish the management method for the Renewable Energy Development Special Fund (12)Study and establish the concrete methods on interest subsidy from finance and favorable revenue for renewable energy 2019/4/9

Regulations issued Issued so far To be issued in 2006 Regulation and Management Measure of RE power Regulation on Renewable Power Pricing and Costing Sharing Guideline of RE industry development (technology catalogue) Some national standards (such as solar building standard, PV power grid connection standard etc.) Regulation on Special RE Fund To be issued in 2006 National Middle and Long-term Strategy for Renewable Energy Development and 11th-five-year Renewable Energy Development Plan (has been submitted to the State Council) Solar Building Economic Policy etc. Effective: Definite the national target, key projects and their distributions Giving a sound signal In drafting or preparing Financing policies (tax, loan etc.) Other national standards to be improved Resource survey etc. 2019/4/9

Regulation and Management Measure of RE Power Generation Effective Overcome the barrier of grid-connection for renewable power Power-grid companies must provide the service for renewable power grid-connection Overcome the barrier of renewable power generators selling RE power and price Power-grid companies must purchase RE power with the tariff of Government Fixed Price Overcome the barrier of power-grid companies paying the cost of grid-extension for RE power generation Cost for grid extension for RE power generation is included in the scope of nationwide cost sharing Regulated that hydropower is included 2019/4/9

Regulation on Renewable Power Pricing and Costing Sharing(1) For Renewable power’s pricing Define the principle for renewable power pricing The IRR of renewable power project should be more than the average IRR of conventional energy power project Government fix price and Government guiding price (tender price) Regulate the prices for different renewable power technologies 2019/4/9

Regulation on Renewable Power Pricing and Costing Sharing(2) Price for Wind Power: tender price Implementing Government Guiding Price, possibly Before 30,000 hours, adopt Tender Power Price After 30,000 hours, RE power subsidy price will be cancelled Effective and questions For large wind power projects, tender power pricing is effective How to handle the price issue of small wind power projects:still unclear Questions: tariff level is not a fix level for all project nationwide Increase the risk for project development Increase the difficulty for financing, especially for small scale project developer Rising the input on personnel and capital in preparation stage, as a result increase the cost of the whole project Low price level restricts the development of manufacturing 2019/4/9

Regulation on Renewable Power Pricing and Costing Sharing(3) Price for biomass power: feed-in-tariff Coal fire plant plus 0.25Yuan/kWh, the range of biomass for power will be about 50-72 fen per kWh In the first 15 years, adopt the subsidy Price After first 15 years, RE power subsidy price will be cancelled Bi-fuel and multi-fuel biomass power projects, if the conventional energy contribute over 20%, are taken as conventional energy power projects, and not available for RE power subsidy price Effect A long-term PPA provided and fixed price Easy for financial and economic assessment for projects Problem: Whether current price for biomass power is reasonable for all technologies of biomass power all technologies have same price in a certain province MSW and landfill gas: with relative large benefit Strew, stalk, wood residue for power: uncertain profit rate, (decided by cost of fuel) 2019/4/9

Regulation on Renewable Power Pricing and Costing Sharing(4) Price of solar, geothermal and ocean power Government approval price Determine power price levels according to detail Price determination principle: cost plus rational benefit Payback rate should be similar with that of wind/biomass power projects Most are demo projects 2019/4/9

Regulation on Renewable Power Pricing and Costing Sharing(5) Cost Sharing for Renewable Energy Power All the end-users should share the extra cost, include: Extra cost of gird renewable energy power Operational cost of off gird renewable power (government invested) Cost for grid extension for RE power generation A surcharge will be collected by gird to cover the cost Gird will play a key role in the system 2019/4/9

Regulation on Renewable Power Pricing and Costing Sharing(6) Implementation for Cost Sharing Grid company collect Renewable Power surcharge Tax free for surcharge Unify adjusting among provincial power-grid companies 2019/4/9

Policy Framework Under the RE Law- giving good opportunity for RE development Quota for large scale electricity producer Tariff of bidding National RE development plan RE electricity Grid Company Electricity producers from RE National RE development goals Tariff of RE products with fixed price End User RE consumption Other RE products (Gas, thermal and liquid fuel) Suppliers for gas, thermal and liquid fuel Provincial RE development plan Non-electricity producers from RE 2019/4/9

China Renewable Energy Development Plan 2019/4/9

Progress Started drafting in 2004, simultaneously with the drafting of China RE Law Has been submitted to State Council To be issued in 2006 The targets of RE development in 2010 and 2020 2019/4/9

Targets RE technology 2005 2010 2020 Hydropower(GW) 117 180 300 Wind power(GW) 1.26 5 30 PV(MW) 70 1800 Biomass power(GW) 2 5.5 Other RE power (MW) 25 50 100 Bio-fuel(Mt) 112 220 1200 Biogas(Gm3) 8.5 19 44 Solar water heater (Mm2) 80 150 Total RE (Mtce) 148 273 544 Percentage of RE 8% 10% 16% 2019/4/9

Strategies for Wind Conditions to meet national targets Cost Reduction Market to stimulating the financing Grid Connection 2006-2010；2011-2020 2019/4/9

Establishment of Stable Market for Wind Enhance building on standards for technology improvement and keeping stable market Grid construction Wind power grid-connection standard Power grid improvement and extension plan for wind power Key technologies of wind power grid connection Technologies of short-term prediction of wind power generation 2019/4/9

Establishment of Stable Market for Wind Key issue: pricing Large wind farms plan: from 2006-2010, the tender projects from government: From 2006-2008, 0.5-1GW per year From 2009-2010, 1-1.5GW per year Wind power cost reduction New technology Quality control Running and maintenance cost 2019/4/9

Strategies for Biomass Government’s role Resource: energy crop tax and subsidy Market access: mandatory measure grid integration (regulation issued) certification for biofuel for entering fuel sale systems Marketing strategy: attracting investment biopower biofuel pellet 2019/4/9

Strategies for PV PV Industry Chain in 2005 Hot points from Government The top and bottom Bottom: raw material and silicon block Top: market and technology deployment roof PV PV grid-connected systems in deserts mandatory measure Market Strategy private sector’s role (major) PV Industry Chain in 2005 Item Raw materials Silicon block wafer cell Module MW 12 225 200 270 400 2019/4/9

Energy Research Institute & China Renewable Industry Association Thanks for attention Li Junfneg Energy Research Institute & China Renewable Industry Association +86-10-63908465 & +86-10-68002615 lijf@public.bta.net.cn www.criea.net 2019/4/9