China to raise renewable power tariffs within 2 years

BEIJING Thu Mar 31, 2011 6:21am BST

BEIJING (Reuters) - China plans to raise the price of power generated from renewable sources over the next two years in order to stimulate clean energy investment, China's electricity regulator said on Thursday.

When China's grid firms sell electricity from renewable sources they are currently allowed to charge 0.004 yuan ($0.001) per kilowatt-hour more than "conventional" thermal power.

According to the official China Power News, the China Electricity Regulatory Commission (CERC) will increase the "additional" levy to 0.006 yuan per kilowatt-hour either this year or next.

Huang Shaozhong of the CERC's price monitoring department said China had to address the growing "subsidy gap" in order to meet its goal to raise the share of non-fossil fuel energies to 15 percent of the total by 2020.

He said the current levy raises around 10 billion yuan per year, which was only enough to cover around 70 percent of the subsidies offered to renewable energy producers.

China's renewable energy law obliges grid firms to buy all the renewable electricity produced in their region, even though it is more expensive than coal-fired power, but it also allows them to charge "additional" fees for clean electricity sources.

China keeps electricity prices under tight control, and its utilities have suffered massive losses in the last year because they have been unable to pass on rising raw material costs.

Government sources told Reuters on Wednesday that on-grid tariffs could be increased next month in certain regions, and could lead to higher retail prices for enterprises.

(Reporting by David Stanway; Editing by Ken Wills)