Gap Between Renewable Energy Subsidy Approval and Payment Too Long in China’s Ningxia Region

From August to September this year, the Ningxia Office of the Northwest China Energy Regulatory Bureau of the China National Energy Administration wanted to better understand the issues facing local solar and wind producers in the region, especially concerning implementation of renewable energy subsidies for power generation. The bureau’s goal was to understand what could be done to help producers solve practical difficulties around the subsidies. The methodology of the survey included data collection, panel discussions and field visits, as well as input from industry analysts. 

The most concerning finding was that there is too long gap between allocating of subsidy and the actual payout, as well as the inability of the producer to receive the subsidy in full.

The survey covered 212 projects, of which 192 were included in the list of firms entitled to receive additional subsidies on the basis of the first seven groupings of renewable energy tariffs, accounting for 90.6 percent. Twenty projects found themselves excluded. Although 17 billion yuan (approx. US $2.5 billion) was allocated, only 10.7 billion yuan (approx. US $1.5 billion) was made available, only 62.7 percent of the total. The long wait for subsidies to move from allocation to availability seriously affects development of the industry.

The most important advice from the survey: the entire process needs to be revamped to ensure that subsidies are paid in full and on time or as soon as possible after allocation to prevent the kind of gaps between approval and receipt of funding that could raise the risk of a project shutting down or going bankrupt due to poor cash flow. Resolving this issue would provide a stable external environment for producers and promote fair and orderly competition across the industry. 

Other findings revealed that, according to the industry analysts, the logistics and compliance level of the planning process need further reconfiguring, while further effort should be applied to enhance coordination in terms of scale, the amount of subsidy, the on-grid layout, access and intake, to ensure the orderly and healthy development of the industry. 

The survey covered 212 projects from seven companies, with a total investment of 58.4 billion yuan (approx. US$8.4 billion). Of those, 105 projects were for wind power generation, backed by an investment of 43.1 billion yuan (approx. US$6.2 billion), while 30 had to do with photovoltaic power generation projects, with investment amounting to 8.55 billion yuan (approx. US$1.2 billion).

Total installed capacity across the region reached 41.8 million kW as of June 30, 2018. Of the total, installed capacity for thermal power totaled 23.4 million kW, accounting for 56.1 percent, while that for wind power and photovoltaic amounted to 17.9 million kW or 42.9 percent. The installed capacity for hydropower was 0.42 million kW, occupying only 1 percent.  

As of the end of the first half of the year, 135 wind power and photovoltaic projects generated a total of 49.6 billion kilowatt-hours of electricity and 47.1 billion kilowatt-hours of on-grid energy. 

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Nanjing Shanglong Communications Liu Yuanyuan is Director of Operations and Co-Founder of Nanjing Shanglong Communications. Liu Yuanyuan previously held the position of office manager at the London Financial Times' China translation and editorial bureau in Nanjing overseeing 33 translators, editors and IT support personnel. Ms. Liu brought her many years experience of delivering, under deadline, more than 200 English-language news summaries of articles selected from Chinese-language newspapers and newswires daily as well as supervising the timely completion of 500,000+ word English-to-Chinese translation and localization projects to her role as co-founder and general manager at Shanglong. Ms. Liu joined Shanglong in 2002. In 2006, she added China Business News Service to the product suite – the service provides a continuous flow of well-researched and documented news articles to trade publishers and industry-specific websites looking to supplement their content with the latest news from China in their sector. She manages Shanglong's staff of translators, editors, desktop publishing specialists and support staff, selected from the top universities across China and well versed in the art of translation and in the technology of DTP. Ms. Liu graduated from the People’s Liberation Army Institute of International Relations - China’s elite military academy responsible for the training of the country’s foreign language specialists.

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