Friday, September 25, 2009

China Backs Market Price for Wind Power

Don't think through the implications, they end up depositing one in a curious mashup of Alice Through the Looking Glass and Cloud Cuckoo Land. From the Wall Street Journal:
A top Chinese energy policy official said Friday the price for wind power and other renewable energy should be set by market forces, rejecting calls for fixed prices, a system used in some countries to promote the use of renewable energy.

As China looks to renewables to fill more of its energy needs, many Chinese power companies are looking to develop wind energy but are worried about profitability and thus looking for price guarantees.

"Calls to set renewable energy prices at a high level through a fixed government price are mainly coming from investors," said Zhang Guobao, vice minister of the National Development and Reform Commission, at a press briefing. "But the result, if prices are fixed too high, would be to impact the widespread use of renewable energy."

Renewable energy prices, and in particular wind power prices, should be set through a competitive market, said Mr. Zhang, who is also the chief of the National Energy Administration.

Current prices for wind power, at around 0.5 yuan to 0.6 yuan per kilowatt hour, are "reasonable," and are higher than coal power prices, Mr. Zhang said. He also referred to incentives for renewable energy already in place in China, such as reduced taxes.

Under policies used in some European countries, regional and national utilities are obligated to buy electricity from renewable sources at higher prices....MORE