National Policies


 

 

Framework Policies

 

Name: Renewable Energy Law of the People’s Republic of China (中华人民共和国可再生能源法)

Agency & Date of Issuance: State Council, February 2005 / Amended in December 2009

Effective from: 1 January 2006

Content: Establishing a Framework for Renewable Energy Development

 

Framework legislation on resource investigation, development planning, industry guidance, technical support, promotion and application of price management and cost-sharing, economic incentives and monitoring measures, responsible parties and other aspects related to renewable and wind energy development.

 

The Renewable Energy Law, enacted in February 2005, came into effect on 1 January 2006. One of the main objectives of the law was to attract stakeholder interest in the Chinese renewable energy sector. Sending out a clear signal of the Chinese government’s commitment to renewable energy development by establishing favourable investment conditions and a stable market for renewable energy, the Renewable Energy Law aims to increase the share of renewables in China’s power mix, promote the domestic renewable energy industry, and support regional economic development.

 

The Renewable Energy Law does not in itself promulgate binding renewable energy development targets or economic incentives, but instead serves as a framework law designating responsible government authorities, on national and provincial level, to draft renewable energy development and utilization plans as well as supporting legislation. NDRC is in charge of energy pricing and planning issues, the Standardization Administration of China administers technical standards and codes related to renewable energy projects, the Ministry of Finance is responsible for economic incentive mechanisms, like tax breaks, and government financial support of renewable energy in form of subsidised loans and research and development encouragement. In line with Chinese legislatory practice, the law is purposely vague in its stipulations, serving as an umbrella document providing an outline of general principles to be clarified in subsequently released “implementing regulations”. This approach allows for high flexibility of the regulatory framework, since the implementing regulations are easily revised to improve effectiveness and reflect market conditions.

 

While broad in language, the Renewable Energy Law does include a number of supporting measures crucial to the creation of a favourable market environment for renewable energy (for details, refer to the RE Law Implementation Regulations section). Power grid companies are obliged to connect all licensed renewable energy projects to the grid and purchase the energy generated within their power grid. The expenses for grid connection as well as the excess cost of renewable energy compared to conventional power can be (partially) retrieved via a renewable energy surcharge on the electricity price (also known as renewable energy premium or surcharge). The burden of the renewable energy surcharge is shared across all electricity consumers, with the exemption of agricultural communities and other low-income administrative divisions.

 

The following diagram illustrates the present policy framework governing the wind power sector in China segmented by the affected stakeholders:

 

 

 

Particularly the wind power sector profited from the favourable market conditions the Renewable Energy Law helped to establish. As the most competitive of renewable energies in terms of costs, maturity of technology and feasibility of large-scale deployment, wind energy is the premier renewable energy technology benefitting from the government targets. Government targets and quota policies in combination with a series of measures in support of the domestic industry and a protectionist tax incentive and tariff policy created a stable, foreseeable environment for wind power investment in China. As market development became more predictable, investment in the domestic industry exploded and foreign companies set up shop in China in order to secure a piece of the pie. It is save to say that the clear policy direction of the Renewable Energy Law serves as the foundation for the thriving wind power sector existing in China today. The diagram above illustrates the most important government policies currently governing the wind power sector in China according to the players affected.

 

 

For more detailed information on the implementing regulations, please refer to the RE Law Implementation Regulations section.

 

 

 

 

Name: Renewable Energy Law of the People’s Republic of China - Amended (中华人民共和国可再生能源法(修正案))

Agency & Date of Issuance: State Council, December 2009

Content: Strengthening the Framework for Renewable Energy Development

Although the main provisions of the Renewable Energy Law – the grid enterprises’ requirement to purchase all electricity generated from renewables, to provide mandatory grid connection and the penalties – did not change, the amendment introduces a few alterations that may facilitate a healthier development of renewable energy in China.

 

The amendment addresses three major problems, the recent boom in the Chinese renewable energy sector - particularly in the wind power sector - brought about:

  1. the lack of adequate coordination and due diligence in renewable energy planning procedures, especially with regard to a lack of coordination between a) national and provincial-level governments and b) grid enterprises and power generation enterprises
  2. the inefficiency of renewable energy power generation, due to renewable energy targets being formulated in terms of installed power generation capacity, rather than electricity actually generated
  3. the failure of grid enterprises to provide timely grid connection to renewable energy power generation facilities, due to a lack of financial incentives as well as a lack of enforcement of existing mandatory grid connection regulations.

 

 

The December 2009 Amendment to the Renewable Energy Law, which was originally promulgated in February 2005 and became effective as of January 2006, will take effect from April 1st 2010. It partially addresses the problems mentioned above through a number measures.

 

First of all, by specifying the requirements for the preparation of renewable energy development and utilization plans in more detail, and mandating to put the plans on record with the State Council energy authorities and national power supervisory institutions, the ground is set for a more coordinated, integrated development of renewable energy nationwide. This measure is aimed at improving planning processes, inter-agency coordination and strategic guidance of renewable energy development.

 

The amendment also includes several provisions geared towards alleviating the current situation with regard to an increasingly large number of renewable energy projects - especially wind farms - not receiving timely grid connection. The reluctance of grid enterprises to connect renewable energy power generation stations to the grid stems in part from the intrinsic difficulty of renewable energy grid integration.  In China, grid integration of the rapidly increasing amount of electricity generated from wind power is particularly problematic. Large fluctuations in electricity generation and the often remote location of wind farms, pose significant challenges with regard to the accommodation into the grid, especially in face of China’s regionally fragmented power grid and the concentration of wind power in massive clusters in China. Grid integration therefore means more than connecting the wind farm to the local power grid. A stable and balanced grid demands a number of well-coordinated measures, ranging from construction of additional inter-provincial (ultra high voltage) transmission capacity, to the transfer of electricity to far-away load centres, to power storage, smartening of the grid, (demand-side) load management and additional conventional power reserve capacities.

 

In addition, grid enterprises have little stake in increasing the amount of renewable energy in their grid, since they do not profit from its integration financially. On the contrary, the integration of renewable energy is a considerable drain of working capital due to the extra costs incurred in the grid connection and electricity purchase.

 

In future, renewable energy development and utilization plans are mandated to include a plan for the construction of supplementary electricity grid transmission capacity in accordance with the plans for renewable energy development. This may facilitate the coordination of grid expansion plans (of grid enterprises) with plans for construction of renewable energy capacity (of power generation enterprises), as well as the construction of transmission lines across provincial borders. To support grid companies in the integration of an increasing amount of fluctuating renewable energy into the grid, article 14 of the amendment also adds the requirement for renewable energy projects to conform to special technical standards for grid connection (grid code). Furthermore, power enterprises are obligated to coordinate with grid enterprises to ensure the stability of the power grid.

 

In article 14, the amendment features a government guarantee for grid enterprises’ purchase of the full amount of electricity generated from renewable energy, which is supervised by energy authorities of the State Council together with the national power supervisory institutions (presumably SERC). The strong language suggests government authorities may take a more firm stance with regard to enforcing grid connection and renewable power purchase regulations in future, compared to the lax enforcement in the past.

 

Perhaps the most important change in the amendment, in said article a new provision is put forth introducing the requirement for energy authorities of the State Council, together with national power supervisory institutions and the financial department of the State Council to promulgate a renewable energy quota in accordance with the national renewable energy development and utilization plan. This quota is quantified in terms of the percentage of the quantity of electricity generated from renewables […] in the total quantity of electricity generated within the planned period. This provision hints at a change of policy, changing the metric of renewable energy targets, shifting the focus from renewable energy capacity installed towards the amount of electricity actually generated from renewables.

 

In the same vein, the relevant authorities are also required to formulate specific regulations for grid enterprises regarding priority power dispatching and purchase of the full amount of electricity generated from renewable energies. Article 14 goes on detailing the duties of grid enterprises, highlighting measures facilitating smooth integration of electricity generated from renewables into the grid (incl. mention of smart grid and power storage).

 

Furthermore, the amendment determines the renewable energy fund as the source for grid enterprises to retrieve excess costs for renewable energy purchase and grid connection, allocating the revenue of the nationwide renewable energy surcharge and a special position in the annual budget as the funds’ resources. Clarifying the mechanisms for retrieval of the excess cost of renewable energy may contribute to reducing grid enterprises’ resistance to connect renewable projects to the grid. Still, a void of incentives for grid enterprises to have a stake in renewable energy remains.

 

Supervision and enforcement of the laws’ provisions is strengthened through the addition of references to the national power supervisory institutions to supervise implementation as well as the requirement to include “guarantee measures” in the renewable energy development and utilization plans. However, while the interpretation above offers a rather positive outlook on the potential inherent in the Renewable Energy Law Amendment, prospects for the impact of the law dangle on the string of enforcement and may be hampered by relatively weak provisions for monitoring and penalization.
 

 

 

 

 

Name: Medium and long-term Plan for Renewable Energy Development in China (可再生能源中长期发展计划 )

Agency & Date of Issuance: NDRC, September 2007

Effective from: September 2007

Content: Establishment of Renewable Energy Targets

 

In September 2007, more than one and a half years after the Renewable Energy Law called for the establishment of overarching renewable energy targets, the NDRC released the Medium and long-term Plan for Renewable Energy Development. It was the first time the Chinese government set explicit quantified goals for renewable energy development. The plan establishes a national renewable energy target (incl. hydro power) of 10% of total primary energy consumption by 2010, and 15% by 2020. In addition, specific development targets for different types of renewable energy technologies were set, including a 5 GW target for wind power by 2010, and 30 GW by 2020. These targets have been adjusted upwards since, in order to accommodate for the tremendous pace of renewable energy development. An unofficial target of 100 GW by 2020 has been cited by various media. For the revision of the renewable energy development plan even 150 GW of wind power are rumoured to be contemplated by the authorities.

 

 

 

 

 

 

 

 

In order to encourage the development of clean sources of energy and establish a stable market for the domestic industry the Medium and long-term Plan for Renewable Energy Development also introduced a mandatory market share (MMS) policy setting a national target of 1% of total power generation capacity from non-hydro renewable energy by 2010, rising to 3% by 2020. Every power generation company with a capacity of more than 5 GW was mandated to increase their share of installed non-hydro renewable energy capacity to 3% by 2010, and to 8% by 2020. According to estimates from the Chinese Wind Energy Association (CWEA), in order to reach these targets approximately 20 GW of wind power capacity have to be installed by 2010, and around 100 GW by 2020.

 

The definition of renewable energy targets for big power generation companies in terms of installed capacity instead of electricity generated serves as a critical distortion of incentives for wind power project development. The performance of wind farms – and turbines for that matter – is not considered a primary objective. As long as the capacity is installed, it is not important if and how much electricity is generated. According to Gao Hu, Deputy Director of the Center for Renewable Energy Development at ERI/NDRC, the renewable targets are likely to be redefined in terms of energy output soon.

 

The Renewable Energy Law and its implementing regulations mark a pivotal moment in building confidence in the Chinese renewable market. Investors were assured of government commitment to take an active role in the promotion of renewable energy. The establishment of an overarching target for renewable energy as a share of total energy consumption in conjunction with the definition of a set of technology-specific renewable objectives and the introduction of a binding renewable energy quota for power generation companies established the conditions necessary for renewable energy to prosper.

 

Name: Renewable Energy Development Plan for the 11th Five Year Plan (可再生能源发展十一五计划)

Agency & Date of Issuance: NDRC, March 2008

Content: Energy Strategy, Development Goals and Priority Areas

 

Clarifies the national energy strategy, energy development goals, development layout, the direction of reform, priority areas of energy-saving environment protection. Emphases the importance of wind power and identifies some key technology innovation areas.

 

The country's renewable energy consumption shall account for 10% of the total energy consumption by 2010, which is an increase of 2.5% over that of 2005. During the 11th Five-year Period, China will add about 9 million kilowatt wind power capacity and make its total wind power production to an annual of 10 million kilowatt by 2010. During the period, the country will build about 30 large wind power plants and five wind power bases with a million kilowatt capacity.

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Renewable Energy Law Implementation Regulations

 

Name: National Guidance Catalogue for Renewable Energy Industry Development (NDRC Energy [2005] No. 2517) (国家可再生能源产业发展指导目录)

Agency & Date of Issuance: NDRC, November 2005

Content:

 

Identifies encouraged renewable energy technologies (wind, solar, biomass, geothermal, wave, and hydro) and specific focus areas for manufacturing and R&D in the respective industries.

 

Name: Regulation on the Administration of Power Generation from Renewable Energy (NDRC Energy [2006] No. 13) (可再生能源发电有关管理规定)

Agency & Date of Issuance: NDRC, January 2006 (effective January 2006)

Content: The Administration Regulation

 

Power grid enterprises are responsible for the construction and management of grid connection to renewable energy power generation projects. For the medium and large-scale hydropower, wind and biomass power generation projects directly connected to transmission grids, the connection system should be built by the power grid enterprises at their own costs, with the property rights divided at the point of the first pole of the power plant booster station. In case of any losses caused to the state or enterprises in breach of the above provisions, the National Development and Reform Commission or provincial people’s government will entrust a CPA firm to verify such losses, and mete out compensation based on the verified amount of losses. The specific measures for penalty will be provided for separately.

 

NDRC is responsible for reviewing or approving wind power generation projects with a minimal installed capacity of 50MW. Other projects are subject to review or approval by the investment regulatory department of provincial government with a copy filed to the National Development and Reform Commission for record. Grid connection tariffs of renewable energy power generation projects should be set by the price regulatory department of the State Council according to the characteristics of different types of renewable energy power generation and the circumstances of different localities under the principle of promoting renewable energy development and utilization and securing economic rationality. The price is subject to timely adjustment and publication based on the renewable energy development and utilization technology development.

 

Name: Provisional Management Measures on Renewable Electricity Tariffs and Cost Sharing Program (NDRC Price [2006] No. 7) (可再生能源电价附加收入调配暂行办法)

Agency & Date of Issuance: NDRC, January 2006

Content: The Pricing Regulation

 

The RE Law provides the added cost of developing renewable energy will be “shared in the selling price.” This concept is further detailed in the Pricing Regulation, which provides that a renewable energy surcharge be paid by all end users of electricity. The surcharge may be adjusted annually and will cover (a) the portion of the average purchase price of renewable energy paid by grid operators over the average purchase price of energy from coal-fired projects, and (b) the cost of connecting renewable energy projects to the grid. The surcharge was initially set at RMB 0.001 per kWh by the Renewable Energy Surcharge Level Regulation (NDRC Price [2006] No. 28-33). The surcharge for RE power, determined by the State Council, will be collected from end-users by provincial or inter-provincial power grid companies (the method for calculation of the RE surcharge is detailed in the regulation). Temporarily not included are: cities and counties with their own power grids, power users in Tibet, and agricultural power users. The nation-wide renewable energy power surcharge is to be included in the electricity sale price of power grid enterprises. It is collected by the grid enterprises, and its accounting will be kept independent; the revenue is to be used in a special fund for promotion of RE development. According to measures to be stipulated by the State Council the revenue from the RE surcharge will be distributed among the provincial grid enterprises in accordance with the extra costs incurred through the connection and distribution of renewable energy. 

 

Although the Pricing Regulation originally provided that wind tariffs would be determined by competitive bid, a July 2009 NDRC announcement revealed that as of August 1, 2009 onshore wind projects will receive fixed feed-in tariffs depending on geographic region.

 

Name: Renewable Energy Surcharge Level Regulation, NDRC Price [2006] No. 28-33 (可再生能源电价附加管理办法)

Agency & Date of Issuance: NDRC, July 2006

Content: Setting of Renewable Energy Surcharge

 

Establishes the tax-exempt renewable energy surcharge (¥0.001 per kWh) payable by end users of electricity. This cost sharing arrangement mandates that end users pay a proportion of the higher cost of providing renewable energy, as well as the cost of connecting renewable energy facilities to the grid.

 

Name: Provisional Management Regulations on Renewable Energy Surcharge Balancing (NDRC Price [2007] No. 44) (可再生能源电价附加收入调配暂行办法)

Agency & Date of Issuance: NDRC, 11 January 2007

Effective from: January 2007

Content: Allocation of renewable energy surcharge

 

Provincial grid shall purchase all the renewable energy generated within their service range; the grid enterprises are responsible to collect the RE surcharge from the electricity end-users. Identifies the procedure to calculate and collect the renewable energy surcharge, the methodology for allocating this revenue amongst the provinces, and the role of the monitoring body in this process.

 

In addition, a grid access fee is set. Expenses of grid access of renewable energy electric power generation project refers to the power transmission and transformation investment and operation maintenance fee that especially occur for the grid access of renewable energy electric power generation projects. The rate of grid access fee is to be formulated according to the line length: RMB0.01 per KWh within 50KM, RMB0.02 per KWh for 50-100KM and RMB0.03 per KWh for 100KM and more.

 

Name: Measures on Supervision and Administration of Grid Enterprises in the Purchase of Renewable Energy Power (SERC [2007] No. 25) (电网企业全额收购可再生能源电量监管办法)

Agency & Date of Issuance: SERC, 2007

Content: The Grid Purchase Regulation

 

In line with the RE Law this regulation mandates that all power generated from renewable energy sources has to be purchased by the grid companies. Furthermore, it provides that the national grid authority and national standards authority draft a grid code and power purchase standards and that the grid operator’s purchase of renewable-based power will be supervised by the SERC and local agencies.

 

So far special grid codes have only been passed to provide technical standards for the interconnection of wind, geothermal and solar PV power plants. Existing regulations have so far proved to be insufficient and grid interconnection has been a serious issue for developers as grid companies are not always complying with the RE Law. The China Wind Energy Association has reported that more than 20 percent of China’s installed wind farms did not generate any power in 2008 because of delays in connecting to the grid.

 

Name: Circular on the Establishment of Feed-in Tariffs for On-grid Wind Power Projects (NDRC Price [2009] No. 1906) (关于完善风力发电上网电价政策的通知)

Agency & Date of Issuance: NDRC, August 2009

Content: Establishment of Feed-in Tariffs

 

Taking effect from August 2009, a wind power feed-in tariff policy for onshore projects has been introduced in China. The directive splits China’s territory into four regions with different feed-in tariffs specified in proportion to wind resources and investment conditions. The tariffs are set per kilowatt hour at 0,51 yuan, 0,54 yuan, 0,58 yuan and 0,61 yuan.

 

This new price mechanism is not applicable to offshore wind power projects located in any sea or ocean of China; the State Council will adopt a separate policy for those projects. Moreover, all the electricity projects for on-grid wind power invested by the provinces and approved by the competent governmental authorities for energy resources should be filed with the NDRC and the National Energy Bureau.

 

The introduction of a feed-in tariff is a decisive step towards a more dependable and economically viable pricing regime in China. Investors and wind power developers can now rely on stable and foreseeable wind power tariffs, when calculating the viability of prospective wind farms. The new benchmark tariff system effectively eliminates the downward pressure on on-grid prices exerted by bid competition and allows developers to plan wind farms around a known price. By increasing predictability and security for investors the Chinese government has eliminated one of the major insecurities standing in the way of wind power development. However, a controversial discussion has evolved if the feed-in tariffs are set purposely low by the Chinese government in order to preserve eligibility for CDM. As a consequence, 10 wind power projects have been rejected by the Executive Board of the UNFCC and a number have been put under review.

 

Name: Provision Measure on Energy Conservation and Power Dispatch (节能发电调度办法 (试行))

Agency & Date of Issuance: SERC, 1 April 2006      

Summary:     

It is the first time to set a sequence for different types of power generation.  The power dispatch priority is determined according to energy consumption and pollutant emissions, from lowest to highest. This measure aims to reduce energy consumption and pollutant emission from the electricity dispatch stage. 

Power Dispatch Sequence:

1. Renewable energy generating units with no adjustment ability: wind, solar, ocean energy, hydropower and others;
2. Renewable energy generation units with adjustment ability, and waste generators which meet environmental protection requirements: hydropower, biomass, geothermal and others;
3. Nuclear power generating units;
4. "Heat-power" mode coal-fired cogeneration units: waste heat, residual gas, residual pressure, coal gangue, washing coal, coal-bed methane;
5. Natural gas, coal gasification generating units;
6. Other coal-fired generating units without a heat load cogeneration;
7. Fuel generating units.

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Government Funds

 

Name: Provisional Administrative Measures on the Renewable Energy Development Fund (MOF [2006] no. 237) (可再生能源专向发展资金管理暂行办法)

Agency & Date of Issuance: MOF, 16 July 2006 (effective 30 May 2006)

Content:

 

Sets out the criteria for the use of the Renewable Energy Development Fund, identifies “priority areas”, and provides application and approval procedures.

 

Name: Management Regulations on Special Fund for the Industrialization of Wind Power Manufacturing Sector in China (MOF Document [2008] No. 476 (风力发电设备产业化专项资金管理暂行办法)

Agency & Date of Issuance: MOF, 11 August 2008

Content:

 

On 11 August 2008, the Ministry of Finance issued The Management Regulations on Special Fund for Wind Power Manufacturing Sector in China. The document specifies guidelines for the establishment of a special fund in support of domestic research and development of MW-scale wind turbine systems. Wind power equipment manufacturers fulfilling the fund’s qualification criteria will be eligible for a 600 yuan/kW grant for the first 50 wind turbines produced.

        

The criteria for qualification are as follows:

 

§          Companies eligible must be state-owned or Chinese-controlled wind power equipment manufacturers (incl. wind turbine and component manufacturers).

§          Developed equipment must have Chinese Intellectual Property Right (IPR), i.e. the company must own critical technology or techniques.

§          The capacity of the wind turbine unit must be 1,5 MW or greater.

§          The wind turbine must have passed product certification at China General Certification Center [CGC] in Beijing.

§          Blades, gearboxes and generators of the wind turbine must be manufactured by Chinese-controlled companies. Turbines with Chinese-made converters and bearings are encouraged.

§          If a company applies for a grant for different product models using the same technology, the power differences of the products must be equal to, or more than, 500kW.

§          The wind turbine systems must be manufactured installed and tested in China and must be operated without fault for more than 240 hours.

 

The grant will be divided half-and-half between wind turbine manufacturer and critical component manufacturers. The grant for component manufacturers will be allocated according to production costs, and will particularly favour converter and bearing manufacturers. The dedicated grant is restricted to cover costs of new wind power equipment research and development. Applications must be submitted to the respective provincial government’s financial administration, or directly to the Ministry of Finance in case of state-owned companies.

 

The establishment of the special fund marks a major step towards a Chinese wind power industry with strong indigenous innovation capacity. On the one hand, it is likely to spur investment into innovation and development of large wind turbine systems and contribute to the establishment of a complete wind turbine component supply chain by promoting domestic design and production of core components. On the other hand, the inclusion of provisions with regard to wind turbine certification and testing, establishes incentives for diligent quality control in design and production processes facilitating the development of the international competitiveness of the domestic industry. For research and development of a 1,5 MW wind turbine model, the grant will be worth 45 million yuan (€ 4,83 million), accounting for approximately 10% of the development costs.

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Other Relevant Regulations

 

Name: Energy Conservation Law of the People’s Republic of China (中华人民共和国节约能源法)

Agency & Date of Issuance: Standing Committee of the National People’s Congress,28 October 2007 (effective 1 April 2008)

Content:

The original law from 1997 was revised at the 30th Session of the Standing Committee of the Tenth National People’s Congress of the People’s Republic of China on October 28 2007. It regulates the energy conservation in China with regard to a range of different aspects, including energy conservation management, reasonable use of energy, development of energy conservation technology, environmental incentives, and legal provisions in case of violation of relevant laws and regulations. The Energy Conservation Law also contains language indicating government support of the development and utilization of renewable energy and clean energy. 

 

 

Name: Environmental Protection Law of the People’s Republic of China (中华人民共和国环境保护法)

Agency & Date of Issuance: Standing Committee of the National People’s Congress, 26 December 1989

Content:

The Environmental Protection Law came into effect in December 1989. With regard to renewable energy article 17 says that the government at all levels shall take measures to protect regions representing various types of natural ecological systems, regions with rare and endangered wild animals and plants, regions where major sources of water are conserved, geological structures of major scientific and cultural value, famous regions where karst caves and fossil deposits are found, traces of glaciers, volcanoes and hot springs, traces of human history, and ancient and precious trees. Damage to the above shall be strictly forbidden. Moreover, in article 19, it regulates that Measures must be taken to protect the ecological environment while natural resources are being developed or utilized.

 

Name: Wind farm prefeasibility study compiling method (风电场预可行性研究报告编制方法)

Agency & Date of Issuance: NDRC, 3 September 2003

Summary:

Regulates the compiling bases and obligations need to be followed, moreover, compiling content and technical standards are introduced.

 

Name: Regulation of the Construction and Management of Wind Farms (NDRC Energy [2005] No. 1204)  (发改委关于风电建设管理有关要求的通知)

Agency & Date of Issuance: NDRC, July 2005

Content:

 

Obliges local government authorities to develop local wind energy development plans according to wind resource availability (for wind farms smaller than 50MW). The wind tariff is determined by the State Council through a

tender process.

 

 

Name: Provisional Administrative Measures on Land Use and Environmental Protection of Wind Power Project (风电场工程建筑用地和环境保护管理暂行办法)
Agency & Date of Issuance: NDRC, MOLR and MOEP, 9 August 2005

Summary:

is divided into five chapters, after the general rules says in chapter 1, chapter 2, construction land use, regulates the principle of wind farm project, and indicates that projects should try to use unutilized land, avoid special protective land which is ratified by government. Moreover, the chapter point out that state land resource management department is responsible for the wind farm project land use assessment. A pile of required documents are listed. In chapter 3, environmental protection, wind farm projects follow environmental impacts assessment system. National and provincial environmental protection departments are responsible for assessment. Wind power planning, prefeasibility and feasibility studies should include a chapter concerning the environmental impacts assessment. Before the enterprise applies for the project, it should provide ¡°wind farm project construction environmental impacts report¡±. NDRC, State land resource department and ministry of environmental protection are responsible for the explanation of this regulation.   

 

 

Name: Provisional Administrative Measures on the Preliminary Work of Wind Farm Projects (风电场工程前期工作管理暂行办法)

Agency & Date of Issuance: NDRC, 5 September 2005

Summary:

In the chapter 1, general principles, from content aspect, the wind farm project preliminary work including wind power resources assessment, wind farm project planning, and prefeasibility study and feasibility study; from management model aspect, wind farm project preliminary work is done by the hierarchical administrative management and centralized technical management. In chapter 2 and 3, detail content and management requirements are regulated, specifically speaking, firstly, wind power resource assessment is the foundation of wind farm planning, while the meteorological department is responsible for the assessment. Secondly, wind farm projects planning is the baseline for the exploration of wind power resources. National wind farm projects are planned by NDRC, while provincial wind farm projects are planned by PDRC. Thirdly, prefeasibility study is based on the wind farm planning work. Finally, wind farm feasibility study is based on the prefeasibility study, and it is the foundation for the national ratification of wind farm projects. Following, the chapter 5 indicates the share between working fee.

 

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Technical Standards

 

Name: Wind Power Generation Part I: General Technical Qualification (GB/T 19960.1-2005) (风力发电机组 1部分:通用技术条件)

Agency & Date of Issuance: Standardization Administration of China, 1 January 2006

                                                                                                                                                 

Name: Wind Power Generation Part I: General Testing Approach (GB/T 19960.2-2005) (风力发电机组 2部分:通用试验方法)

Agency & Date of Issuance: Standardization Administration of China, 1 January 2006

 

Name: Technical Code for Wind Farms to Connect to the Grid (GB/Z 19963-2005)  (风电场接入电力系统的技术规定)

Agency & Date of Issuance: Standardization Administration of China, 1 February 2006

 

Name: In-depth regulation on the content of State Grid Corporation wind farm grid access system design (amended) (State Grid Development No. 327)  (国家电网公司风电场接入系统设计内容深度规定(修订版))

Agency & Date of Issuance: State Grid Corporation of China, February 2009

Summary:
The regulation defines the wind farm grid access system design as the basis for feasibility study of wind farm power transmission planning; furthermore, it clarifies the two parts of the wind farm grid access system design.

 

 

 

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Tax and Finance Law

 

Name: Catalogue for the Guidance of Foreign Investment Industries (Amended in 2007) - Decree of the State Development and Reform Commission No. 57 (外商投资产业指导目录)

Agency & Date of Issuance: NDRC, 2007

Content:

A number of investments in the renewable energy sector are “encouraged,” including:

·          Manufacture of parts or finished components for renewable energy equipment, incl. wind turbines with 1,5 MW or above  capacity (limited to equity and cooperative joint ventures)

·          Construction & operation of power plants using solar, wind, geothermal, wave/tidal, hydro and biomass remain on the encouraged list, with no ownership restrictions.

 

Name: China Corporate Income Tax Law (中华人民共和国企业所得税法)

Agency & Date of Issuance: MOF, March 2007 (effective January 2008)

Content: Income Taxes

 

The China Corporate Income Tax Law, which became effective on 1 January 2008, sets a unified income tax rate of 25% for domestic enterprises (DE) and foreign-invested enterprises (FIE). Before, nominally the tax rate for DEs and FIEs was the same (33%), but the effective tax rate after application of tax benefits was 25% for DEs and 12% for FIEs. The new tax law levels the playing field and marks the consolidation of two separate enterprise income tax regimes into one. It provides equal tax benefits for investment in encouraged industries for both FIEs and DEs, while gradually abolishing preferential tax treatment of companies in special geographic areas (special economic zones) and phasing out the general manufacturing tax holiday for FIEs. In practice, this will lead to an increase in tax burden for most FIEs and a decrease of taxes paid by DEs.

 

The new income tax law represents a move away from the focus on the promotion of development within special geographical areas towards an industry-oriented tax regime. The government seeks to channel investment into selected encouraged industry sectors and projects, especially in the fields of technological development (high-tech), environmental protection, energy conservation as well as infrastructure and agriculture. For companies qualifying as encouraged high-tech industries, the tax rate is reduced to 15% regardless of their location. The manufacturing of equipment for renewable energy electricity generation is one of the eight encouraged industries. For wind power, preferential treatment is applicable to construction and management of wind farms as well as Cooperative Joint Ventures (CJVs) and Equity Joint Ventures (EJVs) producing wind power generators bigger than 1.5 MW locally.Wholly Foreign Owned Enterprises (WFOEs) are at a disadvantage, since they are not eligible for the reduced tax rate.In addition, renewable energy companies falling into the encouraged category, located in one of the Special Economic Zones (Shenzhen, Zhuhai, Shantou, Xiamen & Hainan) or in Shanghai Pudong Area and founded after January 1st 2008 will be eligible for 2+3-tax holidays (first two years tax-free, subsequent 3 years taxed at 12,5%). Project developers in China benefit from a reduced VAT on power generation from wind energy (8,5% instead of 17%). In addition, according to the new profit tax-law companies of encouraged industries are eligible for so-called super deduction of expenses for R&D of new products and processes allowing for 150%-deduction of related expenses.

 

Name: Circular on VAT and Import Tariff Rebate on Key Wind Turbine Components (财政部关于调整大功率风力发电机组及其关键零部件、原材料进口税收政策的通知)

Agency & Date of Issuance: MOF, April 2008 (effective from January 2008)

Content: VAT and Import Tariff Rebate on Wind Turbine Components

 

In April 2008, in a move to ease supply chain bottlenecks and further promote the development of the domestic wind power industry through technology transfer the Ministry of Finance introduced a VAT and import tariff rebate on the import of certain wind turbine components. The rebate, retroactive from 1 January 2008, applies to wind turbine manufacturers with an annual sales volume of more than 50 turbines with a capacity of at least 1,2 MW per turbine. Since Chinese wind turbine manufacturers still rely on imports for key components, such as converters, control systems and bearings, this provision will certainly help the domestic industry in scaling up production to meet demand. Also, the import tax exemption of turbines smaller than 2,5 MW was abolished. These measures, aimed at stirring innovation of domestic manufacturers, are also an indication of the increasing maturity of the Chinese wind industry. Not long ago Chinese manufacturers did not have the technological know-how and manufacturing capability to manufacture MW-scale turbines, however the ability of the domestic wind industry to manufacture larger turbines has evolved quickly.

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CDM Regulations

 

 

Name: Measures for Operation and Management of Clean Development Mechanism Projects in China (中国CDM项目运行管理办法)

Agency & Date of Issuance: NDRC (NCCCC), October 2005 (effective October 2005)

Content:

 

In order to qualify as a CDM-project more than 51% of stock should be owned by Chinese funded or Chinese-holding enterprises effectively forcing foreign investors to hand over control of the project to a Chinese partner. There have been reports that the local majority ownership requirement can be circumvented through setting up a Hongkong company for project development.

 

Priority Area for CDM projects are: Energy efficiency improvement, Development and utilisation of new and renewable energy, Methane recovery and utilization. With regard to the CERs generated the following regulations exist: emission reduction resource is owned by the Government of China, emission reductions generated by specific CDM project belong to the project owner, revenue from the transfer of CERs shall be owned jointly by the Government of China and the project owner. The Chinese Government retains the following proportion of CERs generated: HFC and PFC projects: 65%, N2O projects: 30%, priority area and forestation projects: 2%.

 

Name: China's regional grid baseline emission factors 2009 (关于公布2009年中国区域电网基准线排放因子的公告)

Agency & Date of Issuance: NDRC (NCCCC), 2 July 2009

Content: CDM Baseline Calculation

 

The NCCCC of NDRC released China's regional grid baseline emission factors 2009 for CDM project developers reference for the baseline (/emission reductions) calculation in the compilation of PDDs.