WSJ Whiffs Story on China Solar Feed-In Tariffs

It seemed too good to be true.  I had barely completed my own “3 trillion reasons” dance when I receive an email with a link to this Wall Street Journal report which suggested to me that the Chinese government had read and taken to heart the policy prescription of my solar policy article.  WSJ said:

China said it will introduce a preferential tariff itwill pay energy companies that use solar power for their generatingcapacity, as part of the government’s push for greater use of cleantechnology.

The preferential tariff — the price that China’s two state-ownedelectricity transmission and distribution companies will pay energycompanies for their solar power — aims to make solar power competitiveagainst traditional fuels, such as coal, which accounts for two-thirdsof China’s electricity.

Shi Lishan, vice director of the National Energy Administration’sRenewable Energy Department, said the tariff will be 1.09 yuan (16 U.S.cents) per kilowatt hour for solar power that is supplied to the grid.Coal-fired power generation needs a tariff of just 0.3 yuan per kWh tobe profitable.

For a moment, I was in solar heaven.  But alas, all that glitters is not gold!  Asa blogger on China issues, I learned early on never to rely solely onthe western press for news on energy developments in China.   It isjust too complex a task–covering the energy industry AND in China.  Itshard enought for reporters to navigate even just one of those twofields.

Anyways, I digress.  The WSJ would haveyou believe that the feed-in tariff is a nationwide tariff that willspur and explosion of new solar projects.  They don’t actually claim itwould be nationwide, but they certainly say nothing to dispel thatnotion.  Turns out, the articles leaves out important details.  A checkon the Chinese-language reports, such as this, tells a fuller story–the feed-in tariff rate is correct, but it applies only for the 10 MW project at Dunhuang, which we reported in this blog in March.

In fact, we should be skeptical of anynews that claims that there would be a national, one-size-fits-allfeed-in tariff.  Julia Wu, a solar analyst at New Energy Finance inBeijing explained in an interview with GLF:

Different regions have different solarresources.  China will probably set different feed-in tariffs forphotovoltaic projects in different regions based on the results ofbiddings, which would reflect the local solar conditions.

Speaking of biddings, the Chinese articleexplains that no official winner for the Dunhuang project has beendeclared to this day because of the concern that large government ownedcompanies were underbidding at nonprofitable tariffs (the lowest bidwas 0.69 yuan per kwh by a joint bid by SDIC Huajing and Yingli GreenEnergy) just to ensure success in the bidding process and  shore uptheir green credentials.  But the word on the street (or in the press)is that Guangdong Nuclear Energy is the front runner.  Guess what their submitted bid was?

1.09 yuan per kilowatt hour.

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