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Winds of change with standard fees

CHINA has standardized tariffs for wind power projects to ensure profitability for the plants after a survey showed that some of them suffered losses.

The standard tariffs replace a public tendering system as the survey conducted by the nation's electricity regulator revealed that the wind power plants suffered low profit margins, or even losses, due to low utilization rates under the public bidding system.

"The old mechanism could no longer meet the actual management requirements because of the rapid development of the wind sector," said the National Development and Reform Commission, the nation's top planner.

As in the past, the NDRC carried out tendering procedures for national concession projects to encourage a cut in wind power prices. However, some winning concessions offered tariffs that were too low to be viable, forcing the NDRC to modify the rules last year by reducing the leverage of price in the overall evaluation.

With the change, the on-grid tariffs now charged by wind farms to grid companies are set at 0.51 yuan (7.5 US cents), 0.54 yuan, 0.58 yuan and 0.61 yuan per kilowatt-hour, varying by regions with different levels of resources, the NDRC said without elaborating.

Analysts said the new tariffs wouldn't boost the returns of wind farms, as they are largely the same as those that have been given to wind projects over the past one year.

But such an "official" base for determination of wind tariffs could help project clearer investment returns when investors make their decisions, as the NDRC doesn't have to approve tariffs on a case-by-case basis, Japanese financial group Nomura said in a report.

China International Capital Corp analyst Chen Hua said the benchmark prices may encourage developers to tap more wind projects in less windy areas.

As for offshore wind farms, the NDRC said prices for them will be set separately.

Datang International Power Generation Co is a wind farm operator in China while firms such as Goldwind Science and Technology Co, Vestas and Siemens supply the equipment.


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