Advice on China CSP FIT Given by Overseas Experts
Advice on China CSP FIT Given by Overseas Experts
Recently, there has been a heated discussion about Chinese FIT at home and abroad, since Liang Zhipeng, Deputy Director of New Energy and Renewable Energy Department, China National Energy Administration disclosed that China CSP demonstration projects list with total 1 GW capacity and FIT would be formally issued soon.
FIT, however, has not been public since China government completed the review of China CSP demonstration projects in November 2015.The most likely reason of which, according to analysis of professionals, is that National Development and Reform Commission (NDRC) whose Price department have the dominant right to decide final FIT disagrees this electricity price standard. Besides, The suggested FIT given by National Energy Administration shouldn’t be less than RMB1.18/ kWh, whereas, they only have suggestion right.
According to CSPPLAZA, Price department of NDRC has a lower expectation to CSP electricity price, possibly at the range of 1.1~1.15/kWh. Nevertheless, the whole CSP industry wish it to be RMB1.18~1.25/kWh or above. CSPPLAZA specially invited two overseas experts to express their viewpoints on this issue.
1 GW capacity might not be reached if the electricity is too low
Thomas Thaufelder, CEO of CCO Services in Germany believed that China CSP demonstration projects development would be started and FIT would most likely be less than 1.15/kWh. but he also concerned that some developers would withdraw after realizing that the tariff is too low and they might financially fail, and in this way, the 1 GW capacity at the end might not be reached.
Thomas Thaufelder, CEO of CCO Services
when it comes to the reasonable price in their eyes, Thomas considered it as RMB 1.20 -1.25 / kWh. while Miroslav Dolejsi, Deputy Managing Director of SolEngCo GmbH in Germany said that, in consideration of the climate conditions particularly solar resources on Chines territory, they would prefer the prescribed tariff in RMB1.18-1.20/kWh, which could allow a constructions of CSP Plants in provinces Gansu, Inner Mongolia, Qinghai, Xizang and Xinjiang.
Miroslav Dolejsi, Deputy Managing Director of SolEngCo GmbH
“I am waiting for ten years for a tariff, said Thomas Thaufelder, “We started in 2005 in China with a 50:50 project development JV in Inner Mongolia and never could progress because no suitable tariff was fixed.”
Thomas suggested Chinese government to start with a higher figure, because there are many projects under application based on new technology like molten salt parabolic trough. If the tariff will be too low, those developers might consider the risk as too high and finally give up, which causes a draw-back of this technology. China could miss a big chance of becoming the world’s biggest CSP developer.
“After realization of the first GW CSP, the Government should evaluate the results and re-consider the tariff. That is a normal procedure in all technology areas,” said Thomas.
What kinds of design of FIT policy are more suitable for China?
Miroslav Dolejsi, meanwhile, introduced briefly to CSPPLAZA three main designs of FIT policy in CSP market across the world,and he also gave some advice combining the practical situation in China.
• Flat Feed in Tariff. Fixed-price feed-in tariff policies are the most widely implemented of all FIT policy designs and were implemented also in Spain for CSP Technology (along with 25-year contract lengths) made solar CSP a highly profitable investment, but an unprecedented boom in solar in 2007 and 2008 capped solar deployment and instituted more restrictive requirements for generators in order to contain ratepayer impacts and yield a more predictable policy result. This Flat Feed in Tariff does not differentiate between undispatchable power and distchable power and it does not motivate the operators to use the advantages of CSP technologies with TES in the way to compete with dispatchable power generation. This Feed-in Tariff Policy is the less recommended by us because we consider this approach as already overcome for this type of power generation technology.
• Premium Feed in Tariff is the premium-price option, which offers a premium on top of the spot market electricity price. In this market-dependent model, the payment level is directly tied to the electricity market price, rewarding CSP developers when market prices increase, and potentially penalizing them when they drop. Premium-price FIT policies have recently incorporated mechanisms that index the premium amount to prevailing electricity prices. This can create a range within which the premium fluctuates and reduces the chances of overcompensation that can result if electricity prices increase significantly. This feed-in tariff policies is recommended by us for the Demonstration Projects and the Chinese Energy Market but it shall consider a differentiation by project location.
• Predetermined Tariff provides higher payment levels to encourage electricity generation at times of high demand. Because electricity is more valuable during these times, this incentive structure is one way of aligning the FIT payment structure to be more market-oriented. Naturally, this kind of incentive structure applies primarily to CSP technologies that can adjust their time of delivery through multiplier for electricity produced during daily and seasonal times (peak, off peak etc.) and it can differentiate from grid to grid actually from location to location of the CSP Plant. This feed-in tariff policy seems to us to be the most proactive policy for the Demonstration Projects and the Chinese energy market.
Actually, the reason why it is so hard to set out FIT policy in China is that nobody and no institution is able to make a flawless one convencing everyone. not only the whole industry but also China National Energy Administration can offer enough evidence to prove their FIT is completely reasonable. But we still expect a reletively rational electricity price finally after consulting every sides’ opinions. Although China is confronted with different national conditions and market environment, two experts abroad still hope that their opinions can be heard and be given appropriate consideration by relevent decision makers in Chinese government.