China announces new pricing mechanism for inter-provincial electric power transactions

On May 5, 2015, the National Development and Reform Commission of the People’s Republic of China (NDRC) announced new pricing mechanisms starting from 20 April 2015. According to the Issues relating to the Improvement of the Pricing Mechanism for Trans-provincial and Trans-regional Electric Power Transactions (hereinafter referred to as the Circular),  suppliers and receivers in both  inter-provincial and inter-regional electric power transactions will be given the autonomy to determine the electric power quantities and price adjustment mechanisms through negotiations in line with the “risks and benefits sharing” principle or through market-oriented approaches on a voluntary and equal basis. 

Competitive modes such as bidding are encouraged by the authorities to determine the owners and electricity prices of new inter-provincial and inter-regional electricity transmission projects. In addition, the authorities encourage suppliers and receivers to establish a long-term and stable mechanism for electricity transactions and price adjustments.

China releases administrative measures for franchising infrastructure and public utilities

The NDRC, in coordination with five other PRC authorities, released the Administrative Measures for the Franchising of Infrastructure and Public Utilities (the Measures) on April 25, 2015. The Measures will take effect from June 1, 2015.

The Measures aim to encourage social capital to participate in the establishment and management of infrastructure and public utilities. The Measures apply to the franchising activities in energy, water conservancy, environmental protection, municipal engineering, and other infrastructure and public utilities.

The Measures also provide the implementation terms for franchising infrastructure and public utilities, the feasibility of which is determined by a third party institution related to engineering consulting. For instance, in the selection of franchisees, the implementation organ shall consider factors such as industrial features, demand for public products or services to be provided, life cycle of a project and the investment payback period. Financial institutions are also encouraged to provide accounting and financial consulting, syndicated loans and other financial services to franchising projects and qualified franchising projects may be granted a loan for a maximum of 30 years.

Study highlights 86 per cent of China’s electricity could come from renewables by 2050

According to the China 2050 High Renewable Energy Penetration Scenario and Roadmap Study released by representatives from China’s national Energy Research Institute, the State Grid Energy Research Institute and other researchers, China could receive approximately 86 per cent of its electrical power from renewable sources by 2050. The study suggests that China’s growth in clean energy is direct relation to its position as the world’s leading investor in clean technology and renewable energy. The study also found that it is both technically and economically possible to reduce the country’s dependence on fossil fuels. The study suggests that China should increase the use of renewable energy systems in various industries. By improving the efficiency of industrial processes, demand on the national energy grid will reduce and China will be allowed to replace older energy systems with renewable power.

China promulgates administration of annual wind power development plans

The National Energy Administration of the People’s Republic of China (NEA) issued the Circular on Further Perfecting the Administration of Annual Wind Power Development Plans (the Circular) on 15 May, 2015. The Circular sets out the annual national development plan including the annual construction scale, layout, operating indexes and relevant management requirements of all provinces in China. Projects included in the annual development plans must be approved in the current year and should satisfy wind observation for at least one-year for project construction, land selection and planning. There shall be no new projects next year for provinces whose completion rate of the annual development plans fall below 80 per cent. In addition, all provinces are encouraged to carry out pilot programs for allocating wind energy resources through market-oriented means.