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China Set to Pay Renewable-Power Subsidies After Two-Year Delay

China will pay overdue subsidies to renewable-power developers, bolstering cash flow at China Longyuan Power Group Corp., China Datang Corp. Renewable Power Co. and their peers following a two-year delay.

The government has asked power-grid companies to clear payments for the seven months from October 2010, the National Development and Reform Commission said yesterday in a statement on its website. The NDRC didn’t comment on the rest of the outstanding subsidies, which are fixed, above-market tariffs for clean electricity output.

“This is good news for developers who haven’t yet received their renewable feed-in premium” as the delay has erased cash flow for many, Jessica Ng, an analyst at Bloomberg New Energy Finance, said by e-mail. The transition to a new subsidy-allocation system from April caused the holdup, she said.

The new system established a framework for grid companies to receive funds directly from the Finance Ministry based on estimated power generation, and to settle their accounts with project developers every month. The last allocation from the NDRC was for the period that ended in the third quarter of 2010, according to London-based New Energy Finance.

China last year doubled surcharges on power users to 0.008 yuan a kilowatt-hour to subsidize renewable-energy projects.

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