China sets feed-in tariff for wind power plants

China has set a fixed feed-in tariff for new onshore wind power plants in a move that will help struggling project operators to realise profits.

The National Development and Reform Commission (NDRC), the country's economic planning agency, announced at the weekend four categories of onshore wind projects, which according to region will be able to apply for the tariffs. Areas with better wind resources will have lower feed-in tariffs, while those with lower outputs will be able to access more generous tariffs.

The tariffs per kilowatt hour are set at 0.51 yuan (US$0.075, £0.05), 0.54 yuan, 0.58 yuan and 0.61 yuan. These represent a significant premium on the average rate of 0.34 yuan per kilowatt hour paid to coal-fired electricity generators.

Tariffs on offshore wind projects will be determined separately, based on the construction process, said the NDRC.

Under the scheme, grid operators forced to pay a premium for wind generation over coal power will be compensated by surcharges levied nationwide on electricity users.

The NDRC said the new standardised rates would help "change current inconsistent pricing, foster clear expectations and facilitate investments in the sector".

The feed-in tariff will replace the existing public bidding process for wind projects, in which a low-power tariff has been the primary criterion for securing planning approval and energy supply contracts. The current system was last week cited as a barrier to profitability for wind farm operators in a report by the State Electricity Regulatory Commission, a government agency which oversees China's power sector.

Its findings showed that low tariffs and problems gaining grid connection, which left more than 20 per cent of its installed wind power capacity unconnected to the grid last year, meant many wind project operators were struggling to make a profit.