China

China

Onshore wind operators face hit from grid parity in China

Newly installed wind and solar PV projects stopped receiving subsidies from 1 January 2021, and the change may impact some power producers more than others

Wind farm owners in China stopped receiving subsidies this year (pic credit: Siemens Gamesa)
Wind farm owners in China stopped receiving subsidies this year (pic credit: Siemens Gamesa)

Google Translate

Onshore wind power producers may be hit hard by China’s move to grid parity this year — meaning operators of newly installed wind and solar PV projects will receive the wholesale market price for coal power generation.

China’s capacity weighted average wholesale market price for coal generation is around CNY 336/MWh ($51.92/MWh), with a $43-61/MWh range, according to advisory firm IntelStor.

In the past seven years, all onshore wind power purchase agreements (PPAs) and more than 80% of solar PV contracts analysed by the firm were above this range.

IntelStor added that most onshore wind energy companies have received Chinese PPAs worth $72-98/MWh for many years – three-to-five times the current cost of deals in other markets.

The firm's’ CEO, Philip Totaro, noted that profitably delivering power in the $43-61/MWh range is now achievable in most markets with current technology. 

However, he added that power producers used to receiving higher prices well above the grid parity price range may see a material impact.

IntelStor stated: “The transition from PPAs to grid parity may be difficult for some power producers, but there is still plenty of money to be made with new developers.”

Totaro told Windpower Monthly: "Everyone will still make money and a profit, but a more modest profit on the wind side of things."

Last year, analysts at Wood Mackenzie forecast wind and solar to be cheaper than coal in 2021, and offer up to a 40% discount to the fossil fuel in China in ten years’ time.

China's wind power fleet – already the largest in the world – is set to grow as the world's top emitter targets carbon neutrality by 2060, with industry calling for annual additions of 50-60GW to help meet this target.

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Sign up now
Already registered?
Sign in