China to Cut Solar, Wind Subsidies

China will speed up efforts to ensure its wind and solar power sectors can compete without subsidies and achieve “grid price parity” with traditional energy sources like coal, according to new draft guidelines issued by the energy regulator.

As it tries to ease its dependence on polluting fossil fuels, China has encouraged renewable manufacturers and developers to drive down costs through technological innovations and economies of scale, Reuters reported.

The country aims to phase out power generation subsidies that have become an increasing burden on the state.

China’s regions will make an extra push to provide technological and policy support to the renewables sector to ensure they can operate subsidy-free, according to draft guidelines issued by the National Energy Administration dated Sept. 13 to the industry and reviewed by Reuters.

The guidelines said some regions with cost and market advantages had already “basically achieved price parity” with clean coal-fired power and no longer required subsidies, and others should learn from their experiences.

They also urged local transmission grid companies to provide more support for subsidy-free projects and ensure they have the capacity to distribute all the power generated by wind and solar plants.

The draft guidelines were issued for feedback from the industry and it is unclear when they will come into effect.

Solar power generation costs fell 90% from 2007-17 and GCL New Energy Holdings, one of China’s biggest clean energy developers, said in late August that grid price parity could happen within a year.

“Parity is here already for high price markets,” said Thomas Lapham, chief executive of Asia Clean Capital, which builds rooftop solar projects for major corporations in China.