New feed-in price system and closures for coal plants, grid operators now obliged to guarantee renewable energy purchases

May 29, 2020

Among several energy policies that have been announced during this reporting period, three are of particular relevance for the Chinese energy system. Firstly, the State Council has announced that China’s coal power prices will shift from fully government-regulated to partially market-based, although they will remain capped. Power generators, electricity retailers and large electricity users will determine the proportion of floating tariffs through negotiation or bidding. Floating tariffs can rise by up to 10% (after 2021) and on the downside may not exceed 15%. To prevent price increases for industrial and commercial customers, tariffs are not allowed to increase before 2021 – thus only downside price adjustment is permitted before that date.

Secondly, the state-owned Assets Supervision and Administration Commission of the State Council (SASAC) has announced trial measures requiring the ‘Big 5’ state-owned power enterprises to close down loss-making coal power plants amounting to a quarter or a third of overall capacity in Gansu, Shanxi, Xinjiang, Qinghai and Ningxia. The reason for these measures is that out of 474 plants collectively owned by the Big 5, 257 were making a loss.

Thirdly, the National Development and Reform Commission (NDRC) has released a request for comment regarding measures which require grid operators to purchase all on-grid electricity generated from renewable energy generators, except renewable energy traded in the electricity market. Under the new rules, grid companies will be responsible for any unjustified economic losses they cause for renewable energy power generation companies and are liable for providing compensation, thus increasing economic incentives for purchasing renewable energy.

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Sino-German Climate Partnership III

Project country
Political Partners
German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU); Ministry of Ecology and Environment of the People's Republic of China (MEE); National Energy Administration of the People's Republic of China (NEA)
Implementation Partners
Energy Research Institute of the National Development and Reform Commission of the People's Republic of China
09/2017 – 09/2020

Germany and China signed the Memorandum of Understanding on Cooperation in Combatting Climate Change and initiated this bilateral dialogue as "Sino-German Climate Partnership". The project has been established to support the cooperation between the German Ministry of Environment, Nature Conservation and Nuclear Safety (BMU) and the Chinese Ministry of Ecology and Environment (MEE). The new phase of the project starts in 2018 with close alignment to the restructuring at the Chinese government. In this phase, the project aims to advance the policy dialogue and cooperation with the Chinese partners domestically as well as within the international context of climate change. Part of the work will be supporting the development and implementation of China's medium- and long-term low-carbon development strategies, hence by supporting the Chinese government in strengthening the climate governance system. Domestically the SGCP project supports the policy dialogue on climate change (Sino-German Working Group on Climate Change) and enhances the exchange of German experiences and best practices, this includes strengthening capacities for the development of integrated climate and energy action plans as well as adaptation concepts for cities. On international level the SGCP project enhances the knowledge of both patterns about best practices in regard of climate policies and their implementation. For new cooperation topics identified by the Working Group on Climate Change, the project acts as an incubator for IKI development. As interface for information management, it serves a as a hub for exchange between partners of the IKI within and outside China, especially within the UNFCCC process.