The high cost of the electricity generation has always been the main constraint on the new energy development in our country. In order to lead, promote the continuous health development of energy-related industries, and improve the market competition of wind power, the National Energy Administration recently has issued the Circular on Tasks for Demonstration of Wind Power Pricing at Grid-Parity, requiring to promote the realization of the power generation side of the parity, and develop the tasks for demonstration of wind power pricing at grid-parity. This action means that wind power will enter the “Parity Era” earlier than other new energies such as photovoltaic power.

    During the period of the “the 12th Five-Year Plan”, due to the rapid growth of the installed wind power capacity, the optimization of the development layout, the striking advance in technologies, and the improvement of the policy system. The wind power has been the third largest energy since the coal power and hydroelectricity, entering the stage of the alternative energy from that of the complementary energy. The economy, however, is still the key factor of limiting the development of wind power. Compared with the cost of the traditional fossil fuel power, that of wind power is still higher, along with stronger subsidy demands and the dependence on the policy. And meanwhile, changes in policy have great influence on the industry.

    “Over the recent years, technologies for the development and utilization of wind power in our country have made unceasing progress. The condition of developing the tasks for demonstration of wind power pricing at grid-parity is basically ready, due to the continuous expansion of the application scale, the marked improvement of the economy, and the zero-subsidy technical condition of access to the Internet possessed by part of areas with better resource conditions.” an official from the National Energy Administration said.

    In November, 2014, according to the Energy Development Strategy Action Plan (2014-2020) issued by the State Council, wind power will have equivalent on-grid power tariffs as coal power, which can realize wind power pricing at grid-parity in 2020. At the end of 2015, the National Development and Reform Commission had issued the Circular of the National Development and Reform Commission on Improving the Policies on Benchmark On-grid Tariffs for Onshore Wind Power and Photovoltaic Power Generation Projects. Targeted at the project of the benchmark on-grid tariffs for onshore wind power, the circular requires the first three categories of resource areas and the fourth resource area respectively reduce 2 cents and 3 cents, and 1 cent and 2cents in 2016 and in 2018.

    “The renewable energy technology in our country has made remarkable progress, with the great decrease of the cost in recent years.” said an official from the National Energy Administration, who proposed a goal that the on-grid tariff of wind power can compete with the local coal-fired power in 2020. This goal actually transmits a signal that it is a must for the industry to cut off the cost by the technological advance so as to get rid of the dependence on the policy subsidy. According to the current situation, it is predicted that the goal of wind power and photovoltaic power pricing at grid-parity can be achieved, if the accommodation problems can be solved effectively.

    Zhu Ming, the Director of the New Energy & Renewable Energy Department of the National Energy Administration, disclosed that the price of wind power in the first resource area had dropped from RMB 0.51 to RMB 0.47 per kWh, and that some areas had been qualified for the grid-parity after solving the power brownouts.

    The demonstration of wind power pricing at grid-parity undoubtedly will pave the way for achieving the goal in 2020. As the Circular requires, the construction scale of the demonstration project must be decided by power grid enterprises of all provinces (autonomous regions/municipalities) and the Xinjiang Production and Construction Corps, without the restriction of annual scale index. However, there should be a strict restriction on the scale of the demonstration project, that is, no more than 100,000 kW in red-alert areas of wind power. And the on-grid power tariffs of the demonstration project should be implemented according to the on-grid power tariffs of the local coal-fired power, while the related generating capacity does not issue the Green Power Certificate.

    To ensure the demonstration effect, the Circular requires that power grid enterprises should effectively engage in the grid construction matched with the demonstration project, and ensure that the transmission project of the supporting grid can simultaneously go into production with the wind power project at the same time. After completing the construction, power grid enterprises should sign electricity purchase and sale agreements with wind power development enterprises. Meanwhile grid enterprises should explore the potential of the system accommodation, first satisfy the near accommodation demands, and then ensure the “no-brownouts” of the demonstration project of the grid-parity.

    According to industry sources, it cannot be showed that the clean energy such as the wind power has environment benefits because currently there is not a regime that reflects the cost and tax of the fossil fuels. The haste grid-parity will bring tremendous pressure to wind power enterprises.