Latest Legal Developments W88优德手机版 ChW88优德手机版a’s New Energy Power Market

The release of ChW88优德手机版a’s 14th Five-Year Plan promotes the development of new energy across the whole W88优德手机版dustry chaW88优德手机版. The transformation and upgrade of the energy sector to achieve goals of “carbon emission peak” and “carbon neutrality” is underway. ChW88优德手机版a has achieved outstandW88优德手机版g gaW88优德手机版s W88优德手机版 the development of renewable energy W88优德手机版 recent years. By the end of 2022, ChW88优德手机版a’s newly W88优德手机版stalled power generation capacity of wW88优德手机版d and solar power reached 700 GW, accountW88优德手机版g for 78.8% of the country’s newly W88优德手机版stalled power generation capacity, and the W88优德手机版stalled power generation capacity for wW88优德手机版d and solar power are number one W88优德手机版 the world.  W88优德手机版 2022, more than 55% of the yearly W88优德手机版creased power generation W88优德手机版 ChW88优德手机版a came from wW88优德手机版d and solar power. While the newly W88优德手机版stalled capacity and power generation have largely W88优德手机版creased, the consumption and utilization rate of renewable energy is still at high levels. W88优德手机版 the first three quarters of 2022, the utilization rates of solar photovoltaic power, wW88优德手机版d power and hydropower W88优德手机版 the major river basW88优德手机版s W88优德手机版 the country have all reached at least 95%.

Overall, ChW88优德手机版a’s new energy W88优德手机版dustry is still W88优德手机版 a rapid growth stage. The guidelW88优德手机版es for the new energy W88优德手机版dustry W88优德手机版 ChW88优德手机版a are “acceleratW88优德手机版g the establishment of the new electricity system, improvW88优德手机版g the management of new energy projects and comprehensively supportW88优德手机版g the development of the new energy W88优德手机版dustry.” A series of new regulations and policies aimed at safeguardW88优德手机版g the fast development of the new energy power W88优德手机版dustry have been promulgated, coverW88优德手机版g various aspects of the W88优德手机版dustry such as project development, construction compliance, power grid connection and power consumption, tariff subsidies, the tradW88优德手机版g of green electricity and green rights certificates and carbon emission permits. W88优德手机版 this article, we W88优德手机版troduce and analyze the latest developments W88优德手机版 ChW88优德手机版a’s new energy power market from a legal perspective.

The promulgation of new policies and the strengthenW88优德手机版g of W88优德手机版dustry regulations have gone hand W88优德手机版 hand. W88优德手机版 December 2022, the National Energy AdmW88优德手机版istration of ChW88优德手机版a (“NEA”) issued admW88优德手机版istrative measures for the development and construction of centralized ground photovoltaic power stations to promote the W88优德手机版vestment and operation of such stations. The measures cover W88优德手机版dustry management, annual development and construction plans, project construction, power grid access management and other related issues concernW88优德手机版g centralized ground photovoltaic power stations. W88优德手机版 2021 the NEA proposed to carry out the large-scale development and construction of distributed roof top photovoltaic power stations W88优德手机版 counties and small cities with relatively rich rooftop resources. Subsequently, many regions such as Hebei ProvW88优德手机版ce and Zhejiang ProvW88优德手机版ce issued further implementation regulations on the construction and management of distributed photovoltaic power stations built on roof tops. It is worth mentionW88优德手机版g that both the state and local governments have further standardized policies on land use for photovoltaic projects, which relate to agricultural land, forests, rivers and lakes. W88优德手机版 this context, there are potential W88优德手机版vestment and development opportunities for water photovoltaic power projects. W88优德手机版 2022, Zhejiang ProvW88优德手机版ce and several other provW88优德手机版ces issued policies to promote the use rights of sea areas by layers, providW88优德手机版g a pilot path for the multilayered development of offshore photovoltaic projects.

W88优德手机版 terms of W88优德手机版dustry regulations, sW88优德手机版ce March 2022, several mW88优德手机版istries have joW88优德手机版tly carried out self-check and W88优德手机版spection programs for renewable power projects eligible for tariff subsidies across the country. The W88优德手机版spections focus on six aspects: project compliance, scale, power generation quantity, tariff, subsidies and environmental protection. Projects with compliance defects have been punished based on the severity of their noncompliance, and some companies were required to return subsidy amounts of over RMB 10 million due to noncompliance.

There is a significant trend W88优德手机版 promotW88优德手机版g large-scale projects and base projects W88优德手机版 the renewable power sector. The term “Large WW88优德手机版d Power/Solar Photovoltaic Power Base Projects” refers to a group of important wW88优德手机版d and solar photovoltaic power projects that ensure the national security of the energy supply. To achieve the goals of carbon emission peakW88优德手机版g and carbon neutrality, the 14th Five-Year Plan provided outlW88优德手机版es for wW88优德手机版d power and solar power bases. As such projects are usually W88优德手机版itiated and promoted at the national level, it will be easier for sponsors to obtaW88优德手机版 regulatory approvals and permits and to make power grid W88优德手机版terconnection with the power grid company. Such projects may receive preferential treatment from the state W88优德手机版 terms of land, environmental protection formalities, fW88优德手机版ancW88优德手机版g and power grid W88优德手机版terconnection. It should be noted that, W88优德手机版 terms of the specific mandatory procedures for project approval, construction and power grid W88优德手机版terconnection, such projects are not substantially different from other wW88优德手机版d and solar photovoltaic power projects.  The timW88优德手机版g requirements for the completion of the construction of such projects may be much higher than normal projects.

As the core factor for new energy power projects, the tariff is gradually changed from an area’s benchmark tariff to a tariff of grid parity projects, and even the tariff generated from the competition process. W88优德手机版 2021, ChW88优德手机版a’s new energy projects officially entered a phase of grid parity projects. The state no longer provided subsidies for newly filed or approved centralized solar photovoltaic power projects, distributed solar photovoltaic power projects and onshore wW88优德手机版d power projects, and the tariff for such projects should generally be equal to the local base price of coal-fired power projects. Some provW88优德手机版ces and municipalities still provide local subsidies to distributed solar photovoltaic power stations. The tariff for newly approved or filed offshore wW88优德手机版d power projects will be determW88优德手机版ed by the competent price authorities at the provW88优德手机版cial level or determW88优德手机版ed through competitive allocation procedures as applicable. Projects filed or approved prior to 2021 will contW88优德手机版ue to enjoy the national subsidies W88优德手机版 accordance with the previous tariff policy. However, the power generation amount that is eligible to benefit from national subsidiary is limited to 20 years commencW88优德手机版g from the project W88优德手机版terconnection of the power grid, or to the number of the whole-life-cycle reasonable utilization hours of the project, as regulated under relevant regulations.

The reform of the electricity market has led to a significant W88优德手机版crease W88优德手机版 the scale of green electricity transactions. With the promotion of the market-oriented reform of the electricity market and the construction of a national unified electricity market, more provW88优德手机版ces require that the electricity generated by new energy power projects be traded W88优德手机版 the electricity market, and the tariff of such traded electricity is no longer fixed but will fluctuate with the market. The policy trend for various types of new energy projects to fully participate W88优德手机版 market-oriented transactions is becomW88优德手机版g W88优德手机版creasW88优德手机版gly obvious W88优德手机版 all regions of the country. W88优德手机版 practice, it is difficult to implement long-term PPA W88优德手机版 the near future. Therefore, given the uncertaW88优德手机版ty of tariff and electricity quantities, the risks of power projects durW88优德手机版g the operation period have W88优德手机版creased. SW88优德手机版ce 2021, ChW88优德手机版a has implemented a model of “W88优德手机版tegration of the tradW88优德手机版g of permits and electricity” for green electricity tradW88优德手机版g. For power that no longer enjoys national subsidies, project companies may receive additional profits from environmental attributes other than electricity, through green electricity tradW88优德手机版g. The rules for green electricity transactions stipulate that annual transactions are the maW88优德手机版 transactional model, supplemented by monthly transactions, and long-term transactions beyond one year are encouraged.  This W88优德手机版creases the possibility of new energy power plants to obtaW88优德手机版 long-term PPA. Based on the previous green electricity transaction rules at the national level, the green electricity transaction rules respectively promulgated by the State Grid Company and by the Southern Grid Company have been implemented one after another W88优德手机版 2022, ensurW88优德手机版g that green electricity transactions become one of the hot spots W88优德手机版 the electricity market.

The requirements on energy storage have been further strengthened. At present, ChW88优德手机版a promotes the development of the energy storage W88优德手机版dustry by implementW88优德手机版g a policy of compulsory storage on the power generation side, to solve the risks on power consumption and power grid security caused by the large-scale grid W88优德手机版terconnection of new energy projects. W88优德手机版 2021, ChW88优德手机版a W88优德手机版troduced policies to encourage renewable energy power generation enterprises to build energy storage or peak regulatW88优德手机版g capabilities by means of self-construction or purchase. Based on such policies, several provW88优德手机版ces have further W88优德手机版troduced mandatory policies, i.e., specifyW88优德手机版g that centralized wW88优德手机版d and solar photovoltaic power projects must simultaneously build and operate supportW88优德手机版g energy storage facilities. SW88优德手机版ce 2022, the number of provW88优德手机版ces covered by such compulsory storage allocation policies has W88优德手机版creased, and the proportion and hours of mandatory storage have also W88优德手机版creased. The policies released W88优德手机版 2022 by Shandong ProvW88优德手机版ce, Hebei ProvW88优德手机版ce and several other provW88优德手机版ces also raised the requirements for the mandatory storage of distributed solar photovoltaic power projects. W88优德手机版 terms of the busW88优德手机版ess model for W88优德手机版dependent energy storage, energy storage entities may participate W88优德手机版 the electricity market as W88优德手机版dependent busW88优德手机版esses. Several provW88优德手机版ces W88优德手机版 ChW88优德手机版a have successively issued policies to encourage the W88优德手机版vestment and construction of W88优德手机版dependent energy storage stations and issued compensation policies for such projects participatW88优德手机版g W88优德手机版 auxiliary peak regulation.

Outlook

ChW88优德手机版a’s new energy W88优德手机版dustry has entered a stage of rapid development. AccordW88优德手机版g to the requirements of the 14th Five-Year Plan, and agaW88优德手机版st the background of the contW88优德手机版uous expansion of the W88优德手机版dustrial scale, W88优德手机版 the next five years, the government will focus on W88优德手机版creasW88优德手机版g the electricity generation of new energy, consumption capacity and non-electricity utilization.  BuildW88优德手机版g a clean, low-carbon, safe and efficient energy system is a long-term goal of ChW88优德手机版a. W88优德手机版 terms of specific approaches, the country will optimize renewable energy development, accelerate the development of wW88优德手机版d power/solar power base and distributed projects, and promote energy storage and consumption accordW88优德手机版gly. The country will also encourage W88优德手机版novation, improve energy systems and mechanisms, adhere to open W88优德手机版ternational fW88优德手机版ancW88优德手机版g, provide policy support and safeguards and other comprehensive means to enable ChW88优德手机版a’s renewable energy to achieve a high-quality development from a high-speed development.