China’s Order for Green Power Purchases Lifts Wind, Solar Shares

  • China targets utilization hours of at least 1,800 for wind
  • China requires minimum utilization hours of 1,300 for solar

China's Wind Farm Stocks Climb on Utilization Policy

China sent shares of renewable-energy companies higher by forcing grid operators to buy wind and solar power in regions where network congestion has idled plants.

Grid companies will have to buy sufficient power that ensures wind farms across nine regions including Xinjiang and Gansu can operate at least 1,800 hours a year, according to a Tuesday statement on the website of the National Development and Reform Commission. A similar purchase rule was set for solar farms to secure utilization of at least 1,300 hours across 11 regions, said the NDRC, the country’s top economic planning agency.

China Datang Corp. Renewable Power Co., a Chinese clean-energy operator, rose the most in 3 years, climbing as much as 16 percent to HK$0.95 before paring gains to HK$0.90. China Longyuan Power Group Corp., a Beijing-based wind farm developer, and China Singyes Solar Technologies Holdings Ltd., a project-engineering company, also surged the most in about year. The benchmark Hang Seng Index slipped 0.2 percent at 3:15 p.m. local time.

The requirement “will be a strong support for the photovoltaic industry,” said Chen Kangping, Chief Executive Officer of JinkoSolar Holding Co., a Chinese solar-panel maker and project developer listed in New York. The guaranteed utilization hours are satisfying enough to ensure stable return from projects, he said in a telephone interview.

Solar capacity has surged more than seven-fold and wind has almost doubled since 2012 as China seeks to generate 15 percent of its power from renewable energy and nuclear by 2020, according to data compiled by Bloomberg. The additional capacity has made the grid struggle to transmit the influx of clean power.

The rate of China’s renewable plants sitting idle has been worsening. About 15 percent of wind turbines sat idle across China last year with almost a third of photovoltaic panels in the northwestern province of Gansu sitting unused, according to data from the National Energy Administration.

The minimum purchase is a “compromise” to a previous pledge of buying all the power from renewable plants, said Wang Xiaoting, a Hong Kong-based analyst from Bloomberg New Energy Finance. However, “it’s better than nothing. If it’s implemented in practice, it will improve the situation.”

China also is encouraging companies to sell power exceeding the amount of minimum purchases through market-based measures, according to the statement. Those sales will still be subject to renewable power subsidies, NDRC said.

— With assistance by Feifei Shen

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