China plans to slash subsidy for renewable energy production as project costs drop

Beijing will reduce the assured subsidized prices for all newly constructed large-scale solar power plants as well as onshore wind turbines for the electricity they supply to the country's national grid. According to China's power price regulator, National Development and Reform Commission (NDRC), the move will be effective from Jan. 1, 2017. Compared to 2016, China will slash tariffs the government pays to different solar farms by about 19 percent in 2017. At the same time, subsidies paid to the wild mills now will be cut by 18 percent in 2018, NDRC said in a statement issued on Dec. 26, Monday. According to China's state power planner, the new move will be helpful in annually reducing subsidies paid by the government to new photovoltaic as well as wind power projects to the tune of 6 billion yuan ($863 million).

Likewise, after the new prices come into effect, the country expects to cut the subsidy for new onshore wind power by 1.5 billion yuan ($216 million). The decision to cut subsidy rates have been taken following the 30 percent drop in the average price of solar panels during in 2016, Bloomberg reported. In addition, prices of turbines required to generate energy from wind also fell during the current year. The drop in prices has lead to lowered bids offered by solar developers to undertake construction of projects. The NDRC has also stated that the subsidies have been trimmed down to reflect lower cost of generating energy. According to the commission, the move will go a long way in easing the load on state investment. Meanwhile, the country will continue encouraging the local authorities to take advantage of auctions for opting for renewable energy developers with a view to lower power prices further, the NDRC said in its website. According to the regulator, the cuts will be lowest in the country's regions having poor solar radiation and very calm wind. Incidentally, people as well as industries in these areas also use additional energy. However, the commission has made it clear that the existing energy price will not be affected by the cut in subsidy rates. The new rates will not have an effect on energy costs for community-based solar power projects and offshore wind turbines.
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