RENEWABLE COST ANALYSIS AND TREND IN

CHINA 水电水利规划设计总院

China Renewable

Energy Engineering

Institute

Oct，2014

1. Who we are and What we do

CREEI is still a government-belonged research body, which was born in

the 1950s. The main responsibilities are as following:

•Provide the unique central government level technical advices on

renewable energy;

•Organize the technical standard committee in renewables;

•Operate the General Centre for Renewable Cost Norm;

•Operate the National Renewable Energy Management Information

Centre, and

•Provide the Country-Specific Strategy Analysis for renewable energy

internationalization with in the NEA’s scheme.

The main policy scheme in China:

•Fixed Feed-In-Tariff for wind and PV, depends on the geographic

distribution;

•National Renewable Fund System: now 1.5 RMB cents/kWh consumed

and to form a national fund pool, which to subsidize the gap between

fixed renewable FIT and the conventional power FIT;

• PPA and subsidy transfer: the utility is forced to purchase all the

renewable energy by law, and they are also be required to transfer the

subsidy from the government to the renewable projects owners.

The DATA CREEI COLLECT:

•Project approval documents: the project feasibility study report, the

integration report and the governmental approval documents;

•Project performance data: the energy yield, the availability data and the

curtailment data for projects;

•Project subsidy data: the power purchase and the subsidy for projects;

•Project cost data: the general centre for renewable cost norm performs

cost analysis based on the typical projects; and the renewable

information center also got some acceptance reports, which contained

the cost been audited.

Thus we combined the following data:

•National Planning, to catch up the future projects;

•Cost Norm center and Information center, to catch up the real cost and

performance;

•Technical Service, to catch up the technical improvement and the cost

reduction effect from the production capacity growth of the industry;

To assist the government for renewable energy FIT benchmarking .

2. The Cost of PV

When we talking about the cost, we need to clarify the following

concepts:

•According to the evaluation guidelines for infrastructure projects in

China, the financial model does not consider the inflation;

•The capital, the interest rate and the IRR are now mostly defined the

the government, and we think it is going to change within the next 5 to

10 years;

•Since the PV (or wind) does not need fuel cost, we concentrate on the

investment cost, and only estimate the O&M cost.

Some general findings:

•The “installed cost”of solar PV system decreased about 10% to 15%,

on an average point of view;

•The energy yield performance has not show significant improvement in

the last 2 years, although the panels grows bigger;

•It is very difficult to separate the different FIT benchmarks (which

mostly based on the overall cost per kWh) only by provincial level

geographic categories.

Behind the findings:

•The installed cost reduction comes from mostly two factors: the highly

competition for PV panels and, the land utilization become more and

more flexible;

•The energy cost uncertainty level of utility scale PV and distributed PV

are different: the utility one need to pay more attention about the

quality and possibly curtailment, the distributed one need to consider

the quality, the disputes of the property (like the rooftop, agriculture

constructions) and user-load variation (and also its payment).

•The typical solar resource covers the value from 4500MJ to 7100MJ/m2

(some 5 or 6 provinces covers large discrepency in solar resource), the

fee for land use is also varies.

3. Integration of Renewables

For large scale renewables:

•Lack of transmission line, and new one will take years to be built ;

•The so-announced dispatch difficulties;

And, now we are trying to make the most efficient use of the proposed

UVAC or UVDC line, which including Hami, Jiuquan, Mengxi, Ningdong,

Zhundong, etc. All the energy base will have the ability to install GWs of

renewables. E.g. the Hame wind base will contain 8GW of wind, 1.25GW

of PV.

For small renewables like distributed PV:

•The challenge is we need to recompose the low voltage grids, and we

need to pay more attention about the safety issue.

And now there is NO real case for high PV penetration now. Based on

the experiences now the high PV penetration (composed by small

systems) may appear earlier in the rural area (like the PV-Poor Help

Project, to install PV systems in poor area and help the poor get

sustainable and guaranteed income).

4. Outlook

The relation of Cost and Competebility:

•Low cost brings competebility;

•Price scheme also brings competebility.

In China now we considering the following issues to increase the

competebility of renewables:

•Technical innovation of course,

•The possibly electricity price system reform;

•The possibly resource tax reform;

•The possibly electricity dispatch scheme modification;

•The possibly new-distributed line and electrical power sale policy.

We assume that:

The renewables could compete with conventional power in 10 years.

And the most promising techniques to bring down the cost of

renewables could including the followings:

•Low wind speed WTG techniques;

•Comprehensive utilization of PV;

•Low cost energy storage (small size pumping storage, combined with

industry system, etc).

5. Suggestion

As a driving force to decrease the renewables cost, China wants to share

the relevant data and latest progress.

CREEI now did lots of work domestically. We think it is necessary for

IRENA support some more detailed research work, to ensure the

renewables developed in a more transparent, competeble and

sustainable way.