China’s new energy industry looks set to continue its rapid growth in 2015.
As Beijing implements various measures to develop the sector, new energy plays will remain a hotspot in the capital market in the foreseeable future.
The nation seeks to reduce its heavy reliance on fossil fuel. Northern China has been shrouded in heavy smog since last October, prompting the government to step up efforts in fighting air pollution.
The National Development and Reform Commission, the Ministry of Environmental Protection and the National Energy Administration have jointly released the Action Plan for the Transformation and Upgrading of Coal Power Energy Conservation and Emission Reduction (2014- 2020). Under the plan, the eastern and central regions will reduce the emissions of their coal-fired power generating units to be in line with those of gas-fired plants.
The plan has prompted power generators to upgrade their facilities and reduce emissions. Moreover, more efficient and cleaner generating units will enjoy priority under the nation’s electric power system reform and on-grid tariff restructuring.
These measures will be critical for the bottom line of power plants as they grapple with slowing growth of power demand.
Meanwhile, Beijing is taking a tough stance against pollution. It has unveiled the most stringent regulations on pollution which took effect from Jan. 1. The authorities are also close to finalizing an action plan for curbing water pollution, while that for soil pollution is underway.
Various environmental pollution measures will be carried out this year as the government steps up efforts in fighting pollution.
The National Energy Administration (NEA) has outlined a blueprint for the nation’s new energy development through 2020. China’s energy development will focus on green and low-carbon emissions in the next few years, and the proportion of renewable energy like wind, solar and nuclear in the country’s power mix will be increased.
Under the blueprint, non-fossil fuel will account for 15 percent of primary energy consumption, up from 9.8 percent in 2013. Solar and wind energy sectors will take the lead.
Nine large-scale wind farms will be set up in Guangsu’s Jiuquan, western part of Inner Mongolia, northern Hebei, Jilin, Heilongjiang, Shandong, Xinjiang’s Hami and Jiangsu. Distributed wind power will also be developed in central and southern regions.
By 2020, the nation’s wind power capacity will reach 200 gigawatts, and the price of wind power will level with on-grid power tariff.
Meanwhile, solar photovoltaic capacity will reach 100 GW in 2020 at a price comparable with on-grid power tariff.
The NEA has rolled out various supportive policies to boost solar development. It has approved a second batch of 12 distributed PV demonstration zones in Jiangsu, Zhejiang and Anhui on top of first batch of 18 demonstration zones.
The key question is how the country will attract private investors to tap into the distributed PV sector.
Translation by Julie Zhu
This article was published in the Monday edition of the Hong Kong Economic Journal.
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