Will China’s new renewable energy pricing speed up coal’s exit?
A shift to competitive auctions could accelerate the move to renewables, but much depends on how the policy is designed and implemented.
Until now, wind and solar farm operators have been guaranteed a fixed price (pegged to coal power rates) for a portion of the electricity they generate. Any output beyond that quota had to be sold at lower, more variable prices.
The new policy will see this coal-linked pricing system replaced by competitive auctions that determine the price for electricity from new wind and solar installations. Since coal power is relatively expensive to produce, this change is expected to considerably lower the price of renewable electricity specifically and electricity generally.