China – Power Utilities_ Expert Call Takeaways_ New Policy on New Energy Tariffs and Market Trading

Summary of Key Takeaways from the Expert Call on New Energy Tariffs and Market Trading Industry Overview - Industry: Power Utilities in China, specifically focusing on new energy and renewable energy sectors [1][7] Core Insights 1. Market Reform Policy: The new energy sector is set to fully enter market trading, with the policy aimed at supporting healthy development rather than controlling renewable capacity addition [3][4] 2. Contract for Difference (CFD) Mechanism: This mechanism will protect the renewable tariff for new projects, fixing both price and volume for the execution period unless the project opts out. A price floor will be established to ensure reasonable returns [4][9] 3. Inclusion of New Projects: Approximately 40% of new project volume will be included in the new mechanism in 2025, based on current renewable market trading percentages [5][9] 4. Impact on Existing Projects: Existing projects will continue to enjoy mechanism tariffs similar to coal power benchmark tariffs, with minimal changes expected due to the new policy [9][11] 5. Future Installations: Solar and wind installations are projected to remain around 300GW annually through 2030, with an expected 320GW in 2025 [9][13] Additional Important Points 1. Green Certificates: The value of green certificates is already included in the mechanism tariff, and there will be no secondary sales of these certificates [12][9] 2. Energy Storage: The policy does not focus on energy storage, and the removal of storage requirements for renewable projects is not a new development [14][9] 3. Offshore Wind and Distributed Energy: The impact on offshore wind is expected to be limited, while tariffs for distributed energy projects may decline, potentially accelerating construction before June 2025 [15][9] 4. Provincial Variations: The percentage of projects entering the mechanism will vary across provinces, and individual projects may also differ in their participation [10][11] Conclusion - The new policy is anticipated to accelerate market reform in China's new energy sector without immediate severe impacts on existing market trading prices. The focus is primarily on new projects commencing after June 2025, with existing projects protected under the new tariff mechanisms [11][9]