Green certificate trading will replace some subsidies and there will be changes to the renewable energy quota system
Release time:
2018-10-26
The Second Draft for Comments (hereinafter referred to as the “Draft”) of the “Renewable Energy Power Quotas and Assessment Methods” recently issued by the General Office of the National Development and Reform Commission has once again attracted industry attention. This draft opinion clearly guarantees the consumption of renewable energy in the form of "green certificates", and the industry predicts that it will be conducive to accelerating the development of the new energy industry.
"The above-mentioned draft opinion adopts the model of mandatory quotas for renewable energy and supporting green certificate transactions, aiming to smooth the industry fluctuations caused by subsidy reduction and gaps, etc., and is expected to drive enterprises into a new stage of development." Some industry insiders told the Shanghai Securities News the reporter said.
This opinion draft stipulates six major entities with obligations under the quota system, adding local power grid enterprises affiliated to local people's governments at the provincial level and below and independent power sales companies (which do not have the right to operate the distribution network and are not responsible for guaranteed power supply services), covering Distribution end and electricity sales end.
The draft requires that green certificates be issued to renewable energy producers (power generation companies), with one green certificate for 1MWh. The validity period is the year of assessment. At the same time, the assessment of the quota completion status of each quota obligation entity is conducted by calculating the green certificate.
The opinions also set up the scope of green certificate transactions, which can be carried out between entities with quota obligations and between power generation enterprises and entities with quota obligations. The transaction price of green certificates is formed by market transactions. When the National Renewable Energy Development Fund allocates subsidy funds to power generation enterprises, it will deduct their green certificate transaction income based on the principle of equal replacement.
Shenwan Hongyuan's research report pointed out that replacing some subsidies with green certificate transactions is expected to speed up the payment of subsidies. It also provides power generation companies with a way to quickly withdraw funds from selling green certificates, which is conducive to improving corporate cash flow.
The opinion draft stipulates two major assessment indicators for the quota system, including total quotas and non-hydropower quotas. The time frame stipulates the total quota indicators and non-hydropower quota indicators for this year and 2020 respectively.
The opinions also stipulate corresponding safeguards and punishment mechanisms. Industry insiders pointed out that clear division of responsibilities and supporting punishment mechanisms will help stimulate the enthusiasm of various entities, and the quota system policy is expected to accelerate the implementation.