Chinese government doubles renewables surcharge

China’s National Development and Reform Commission (NDRC) has revealed that the government is doubling the surcharge for solar and other renewables from CNY0.004 to CNY0.008 per kWh. The tariff was raised to cover the premium that utilities pay for renewable electricity and is effective as of December 1.

The move to raise the surcharge rate has considerably boosted the medium-term outlook for solar in China and led to notable stock market jumps for Suntech, JA Solar, Yingli Green and several other Chinese PV firms. Increased developer confidence will also spark further growth downstream, helping the country move closer to achieving its long-term renewable goals.

"This is not going to increase the premium paid to renewable energy projects, although it will double the pool of money used to support clean energy," CIMB Research analyst Keith Li said.

The surcharge doubling is the latest legislative measure taken by the Chinese Government to help achieve its ambitious goal of increasing the proportion of non-fossil fuels in its coal-dependent energy portfolio to 15% by 2020. In 2006, China passed a renewable energy law requiring power distributors to buy all the power generated by renewable energy projects. These regulations also allow them to collect additional fees when they sell the power.

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