Supplementary circular on issues related to the “Opinions on promoting the healthy development of non-hydro renewable power generation”

MOF (2020) No. 426

To the Finance Offices (Departments), Development and Reform Commissions, and Energy Administrations of all provinces, autonomous regions and municipalities directly under the Central Government, to the Finance Bureau, and Development and Reform Commission of the Xinjiang Production and Construction Corps, to the State Grid Corporation of China, and the China Southern Power Grid Corporation of China：

In order to promote the high-quality development of renewable energy, in January 2020, the Ministry of Finance, the National Development and Reform Commission, and the National Energy Administration issued the “Opinions on promoting the healthy development of non-hydro renewable power generation” (MOF [2020] No. 4, hereinafter referred to as Circular No. 4), in order to clarify the settlement rules for the subsidy funds for renewable electricity feed-in tariffs (hereinafter referred to as the subsidy funds)。In order to further clarify relevant policies and to create stable industry expectations, the current supplementary circular regarding these subsidy funds is hereby provided to notify of the following：

　　1. Reasonable utilization hours of the project

The circular No. 4 clarifies that the amount of central government subsidy funds for renewable power generation projects shall be approved on the basis of reasonable utilization hours。In order to ensure a reasonable income for the complete stock of eligible projects, on the basis of such factors as the number of full-load hours for the entire project lifetime when the feed-in tariff was approved, it is now determined that the reasonable utilization hours of various projects throughout their entire project lifetime are as follows：

(1) The reasonable utilization hours for the entire project lifetime of wind power projects in resource areas of Type 1, Type 2, Type 3 and Type 4 are 48,000 full-load hours, 44,000 hours, 40,000 hours and 36,000 hours, respectively。The reasonable utilization hours for the entire project lifetime of offshore wind power projects is 52,000 full-load hours。

(2) The reasonable utilization hours for the entire project lifetime of PV power projects in resource areas of Type 1, Type 2, and Type 3 resource areas are 32,000 full-load hours, 26,000 hours and 22,000 hours, respectively。The reasonable utilization hours for the entire project lifetime of nationally determined PV leader base projects and competitive tendering projects of 2019 and 2020 shall be the number of full-load hours for their respective resource area, increased by 10%。

(3) For biomass power generation projects, including agricultural and forestry residue based biomass power generation, municipal solid waste incineration and biogas power generation projects, the reasonable utilization hours for the entire project lifetime will be 82,500 full-load hours。

　　2. A project's amount of electricity generated eligible for subsidies

Total subsidized electricity over the project lifetime = project capacity × reasonable utilization hours throughout the project lifetime。Of this, the project capacity will be the capacity as was determined at the time of project approval (registration)。If the actual generation capacity of the project is less than the approved (registered) capacity, the actual generation capacity shall prevail。

　　3. Subsidy level

Projects that are included in the renewable power generation subsidy list in accordance with the stipulations of the "Administrative measures for the renewable electricity feed-in tariff subsidy funds" (MOF [2020] No. 5, hereafter referred to as Document No. 5), for the amount of electricity generated throughout the entire project lifetime, shall be eligible to receive a subsidized feed-in tariff, calculated as: Subsidy level = (benchmark feed-in tariff for renewable electricity (including feed-in tariffs determined through bidding and other competitive methods) - local benchmark feed-in tariff applicable for coal-fired power generation) / (1+applicable value-added tax rate)。

Whilst the reasonable utilization hours for the entire project lifetime of the project have not yet been exceeded, subsidies will be awarded on the basis of the actual power generation of the renewable power generation project in the relevant year。

For those projects that are included in the renewable power generation subsidy list in accordance with the stipulations of Document No. 5), and whose lifetime power generation exceeds the total lifetime power generation eligible for subsidies, these shall no longer receive payments from the central government subsidy funds, and instead shall be issued green certificates, in order to allow participation in green certificate trading。

For those projects that are included in the renewable power generation subsidy list in accordance with the stipulations of Document No. 5), and after such projects are connected to the grid for 20 years in the case of wind or PV power generation projects, or after such projects are connected to the grid for 15 years in the case of biomass power generation projects, regardless of whether the project has exceeded its total lifetime power generation eligible for subsidies, these shall no longer receive payments from the central government subsidy funds, and instead shall be issued green certificates, in order to allow participation in green certificate trading。

　　Fourth, strengthen project verification

The National Development and Reform Commission, the National Energy Administration, and the Ministry of Finance will organize verification of the subsidized projects。Among them, the pricing authority is responsible for verifying the determination and implementation of feed-in tariffs；Power grid companies are responsible for verifying project approval (registration) and generation capacity, etc., and the relevant energy authority is responsible for formulating relevant verification standards；The competent finance department is responsible for verifying the payment of subsidies, etc.。

Grid companies should establish data platforms, and carry out continuous monitoring of the installed capacity, power generation, utilization hours and other operating conditions of grid-connected renewable power generation projects, track and analyze electricity bills and subsidy settlement, ensure that the project information is correct and current, and complies with the pricing, project and subsidy management measures as formulated by the state。

(1) At the time when the project is included in the list of renewable power generation projects eligible for subsidies, the project owner shall declare the actual generation capacity of the project。If the declared generation capacity is found to be inconsistent with the actual generation capacity during verification, subsidy funds will be reduced by twice the difference between the declared and actual generation capacity。

(2) Grid companies should allocate subsidy funds in accordance with the project's power generation and subsidy level。If any over-allocation is found during verification, the grid company shall bear the responsibility。

Notice is hereby given。

Ministry of Finance, National Development and Reform Commission, and National Energy Administration

September 29, 2020