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Caixin

China weighs unified five-year plan for renewables

Unreleased draft focuses on new energy power feeding into electric grid

A solar power station in Tongchuan, China. Beijing has pledged to achieve net zero emissions by 2060 and is making efforts to build capacity for renewable and new energy power while reducing dependency on coal.   © Reuters

Chinese planners will abandon their previous practice of issuing separate five-year plans for different forms of new energy in favor of a joint package on renewables, with a stronger emphasis on solar power, an energy official said Thursday.

The draft plan, which has not been released and has yet to be submitted for review, focuses on building a new electricity system with new energy power at its foundation, said Kong Tao of the National Energy Administration (NEA) in a speech to a photovoltaic industry conference.

It comes as Beijing makes efforts to build capacity for renewable and new energy power while reducing dependency on coal power after the world's biggest greenhouse-gas emitter pledged to hit net zero emissions by 2060.

Solar power capacity will grow sharply under the draft plan, which will also focus on competition with a view to wean the industry off government subsidies, Kong said.

Several regions have made their own new energy plans in recent months and vowed to boost wind and solar power. East China's Zhejiang Province plans to nearly double installed solar capacity to 27.5 gigawatts and more than triple wind power by 2025 compared last year.

In Shandong Province, the local energy bureau aims to increase solar power capacity by 129% to 52 GW by 2025.

Solar power development continues to receive strong policy support in China, even as the government seeks to claw back direct subsidies. In June, the NEA issued a notice encouraging local governments to build solar panels on public as well as private building roofs in which the electricity generated can be connected into the state power grid.

During the 2021-to-2025 period, photovoltaic capacity is expected to increase by 70 to 90 GW each year, for an average annual growth rate of 19-22.7%, Wang Bohua, honorary president of the China Photovoltaic Industry Association, told the conference.

Wang said the industry is currently challenged by rising costs of raw materials such as polysilicon, as well as geopolitical tensions. Supply chain prices remained high in the first half of the year, and price pressure stretched through the upstream and downstream industry, he added.

"China has evolved from a subsidy-driven [solar power] market to one driven by grid-parity projects. As a result, demand in the second half of the year mostly comes from grid-parity projects and residential projects," according to research firm PV Infolink.

"However, power stations in the Chinese market saw IRR (internal rate of return) drop to 5.5-5.6% in June, thanks to price hikes across the supply chain that pushed up module prices and worsened inverter and steel shortages."

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Caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Nikkei recently agreed with the company to exchange articles in English.

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