China Will No Longer Subsidize Its Offshore Wind Projects after 2021
On January 3rd, the Ministry of Finance decided to stop funding offshore wind projects after 2021, which leads to “a race of construction” among offshore wind companies.
China has been scaling back the amount of subsidies to renewable power providers, who are expected to compete with coal-fired utilities and achieve “grid price parity”. Last May, the government announced all offshore wind projects shall follow the price guide of 0.8 yuan/kWh in 2019 and 0.75 yuan/kWh in 2020; projects approved in 2018 will no longer be subsidized if fail to connect to grid by 2020, and those approved in 2019 and 2020 will no longer be subsidized if fail to connect to grid by 2021.
This decision was made due to surging offshore wind power capacity in the recent years. In 2018 alone, the finance ministry ended up with a subsidy payment backlog of 200 billion yuan.
Offshore wind companies are now faced with the challenge to complete construction on a tight schedule in order to achieve “grid price parity” without subsidy.
With state subsidy cancelled, there is little chance of receiving province subsidy. Among major coastal provinces (Jiangsu, Fujian, Guangdong, Zhejiang and Shandong), Guangdong is the only province that is said to provide subsidy to offshore wind companies.
It is estimated most projects approved by 2019 will not be able to connect to grid before the end of 2021. As the supply chain of the offshore wind industry remains premature, the future for Chinese offshore wind industry is uncertain.
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