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UPDATED: October 11, 2007 NO.37 SEP.13, 2007
Energy Boost
China adopts new rules to encourage the development of renewable energies

The Huitengxile Wind Power Plant in Inner Mongolia has just what the 2008 Beijing Olympic Games needs-power.

At least 20 percent of the total electricity the games needs-or 50 mw-will be provided by these wind turbines hundreds of miles to the northwest of the capital. With the addition of a new 100-mw project, the plant will generate 259 million kwh of electricity in 2007. Compared to a thermal power plant with the same output, this wind power plant can reduce annual emissions of carbon dioxide by 200,000 tons, sulfur dioxide by 1,900 tons, soot by 826 tons and waste residue by 11,000 tons.

As of September 1, the wind power plant, together with all other power plants that generate electricity from renewable energies, will not need to worry about selling its electricity anymore. The State Electricity Regulatory Commission announced new rules on August 1 for the purchase of electricity generated by renewable sources.

According to the rules, power distributors must include electricity from renewable energies in their power grids, including hydropower, wind, biomass, geothermal and solar energy from September 1, 2007 onward.

Policies and prices

Power grid enterprises and electricity distributors will be held responsible for misconduct that cause losses to producers of renewable energies, according to the newly released rules. Misconduct includes the following: failure to construct necessary facilities to connect the alternative electricity to the power grids or failure to do so in time; refusal to sign electricity purchase and distribution agreements with the producers or purposefully setting obstacles to the agreements; failure to provide services related to the connection of electricity or failure to do so in time; or failure to give priority to electricity from renewable energies in electricity distribution.

The rules also require provincial-level power grid enterprises and electricity generators to report to local electricity regulators on issues related to the output, supply and payment for electricity from renewable energies.

Before the new rules were put into place, grid operators sometimes excluded electricity generated by renewable energies in order to maintain the overall stability of the grids. They found electricity from renewable energies other than thermal power to be unstable. Take biomass power for example. Since the frequency of electricity generation is decided by the biological ferment, electricity generated from biomass is not very steady.

The new rules set clear responsibilities for power grids when including electricity from renewable energies, stipulating that grid corporations should install equipment to insure that electricity from renewable energies would be included in a stable manner. Meanwhile, expenses for connecting grids will also be paid by grid corporations, which helps lift some of the financial difficulties faced by renewable energy-oriented electricity producers located in remote areas.

"That grid corporations should include all electricity from renewable energies is a requirement by the Law on Renewable Energies, and these rules further clarify the supervision details and responsibilities," said Ren Dongming, Deputy Director of the Renewable Energies Research Center of the Energy Research Institute under the National Development and Reform Commission (NDRC). According to Ren, after electricity from renewable energies is included in power grids, relevant authorities will discuss the issue about whether a fixed share of electricity from renewable energies should be set among the total output of electricity.

Nevertheless, electricity companies expect more favorable policies. Lu Shaojie, Deputy General Manager of the National Bio Energy Co. Ltd., said that renewable energy companies still have a strong dependence on government policies, and besides the favorable electricity prices, the government should initiate more diversified supporting policies. Most of the companies generating electricity from renewable energies expect more subsidies, since their costs are higher than those of traditional power companies.

According to a report from China Economic Times, if the cost of thermal power is 1 unit, that of small-scale hydropower, biomass power and wind power is 1.2, 1.5 and 1.7 units respectively, while that of solar photovoltaic power may reach 11-18 units.

The high costs have blocked sales of electricity from renewable energies. Shanghai carried out an experimental project in 2005 where users could choose to purchase electricity from renewable energies on their own accord. However, of the total 64.49 million kwh of "green electricity" available for sale that year, only 23 percent was purchased due to the higher costs.

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