China - Government sets wind power prices to spur renewable energy

China’s government today set benchmark prices for wind power, abandoning a public bidding system to help boost profitability at wind farms as the world’s biggest polluter seeks to boost the use of renewable energy.

The National Development and Reform Commission said the government has set on-grid tariffs at between CNY 0.51 and CNY 0.61 per kilowatt-hour in four regions. Mr Shi Pengfei the vice president of China Wind Energy Association said the prices are about 20% higher than rates determined under the previous system introduced in 2006.

Mr Shi said “It’s good news for future developers”. The rates are higher than prices set under the public bidding system, which ranged between CNY 0.382 and slightly more than CNY 0.5 a kilowatt-hour, and compare with tariffs of power generated by coal fired plants of less than CNY 0.4 per kilowatt-hour.

Chinese wind farm operators include Hong Kong-listed Datang International Power Generation Co and China WindPower Group Ltd. Suppliers of equipment to the industry include China Wind Systems Inc China High Transmission Equipment Group Co and Goldwind Science & Technology Co.

The national and development commission said in the statement without giving details that prices are set according to the different levels of wind resources in the regions.

According to the statement “The old mechanism failed to meet the actual management requirements because of the rapid development of China’s wind power industry. The new system will be able to encourage investors to develop projects in areas with good resources, avoid low quality plants and provide incentives for them to cut costs.”

China, which is building wind turbines, solar plants and hydro-electric dams, plans to reduce major pollutants by 10% in the five years through 2010.

For more information please contact Trevor Sievert at ts@windfair.net