The first batch of green power certificates has been officially issued, and the problem of photovoltaic subsidies may be alleviated.

China's first batch of green power certificates have arrived. On June 12, the National Renewable Energy Information Management Center's WeChat public account released a message stating that, in accordance with the requirements of the "Notice of the National Development and Reform Commission, Ministry of Finance, and National Energy Administration on the Trial Implementation of the Issuance and Voluntary Purchase and Sale System of Renewable Energy Green Power Certificates" (Development Reform Energy [2017] No. 132), the first batch of green power certificates (hereinafter referred to as green certificates) in China were issued to 20 renewable energy power generation projects belonging to companies such as Huaneng, Huadian, China Energy Conservation, and China Water Consultants, laying an important foundation for the voluntary purchase and sale transaction of green certificates, which is about to be piloted on July 1. It is worth noting that through green certificate trading, enterprises with cost advantages will sell their power generation indicators at a price no higher than the national subsidy, which can achieve rapid cash flow recovery, while the subsidy level will alleviate fiscal pressure through a quota system. In the view of industry insiders, after photovoltaic power generation enterprises sell renewable energy green power certificates, the corresponding electricity will no longer enjoy the national renewable energy electricity price surcharge subsidy, and the photovoltaic subsidy problem will be alleviated. Official Release of Green Certificates On February 3 this year, the National Development and Reform Commission, the Ministry of Finance, and the National Energy Administration issued the "Notice on the Trial Implementation of the Issuance and Voluntary Purchase and Sale System of Renewable Energy Green Power Certificates" (hereinafter referred to as the "Notice"), requiring that the purchase of green power certificates will begin on July 1 this year, with the purchase price determined by the buyer and seller through mutual negotiation or bidding, at a price no higher than the amount of the renewable energy electricity price surcharge subsidy corresponding to the certificate. According to the "Notice", a green power certificate is an electronic certificate with a unique code issued by the National Renewable Energy Information Management Center to qualified renewable energy power generation enterprises in accordance with the relevant management regulations of the National Energy Administration, based on the on-grid electricity of renewable energy, through the National Energy Administration's renewable energy power generation project information management platform. It is worth noting that this "Notice" is good news for energy enterprises, because the issuance of green power certificates is linked to the on-grid electricity. As long as the green certificates can find buyers, wind power and photovoltaic enterprises can rely on the on-grid electricity to quickly supplement funds through market channels, and photovoltaic enterprises are particularly looking forward to green power certificates. According to the National Renewable Energy Information Management Center, a total of 230,135 green certificates were issued to 20 new energy power generation projects this time, representing a total on-grid electricity of 230,135,000 kWh. The projects that received green certificates are mainly located in six provinces, including Jiangsu, Shandong, Hebei, and Xinjiang, with a total installed capacity of 1.125 million kW. Among them, onshore wind power and photovoltaic power station projects can apply for the issuance of green certificates after voluntarily registering their ownership qualifications through the information platform. After verifying through the information platform whether the project is included in the electricity price surcharge subsidy catalog, the capacity included in the subsidy catalog, the electricity settlement amount for the application month, and the validity of the relevant certificates, the National Renewable Energy Information Management Center will issue green certificates corresponding to the on-grid electricity of the project to the enterprise. Industry Says It Helps Alleviate Photovoltaic Subsidy Problems It is worth noting that, for both wind power and photovoltaic industries, subsidy issues have become a major problem facing photovoltaic enterprises, and how to resolve them has become a thorny issue for both enterprises and government departments. However, with the verification of green power certificates, the problem of photovoltaic subsidies will be alleviated. In the view of many photovoltaic enterprises, for photovoltaic power generation projects, the income obtained from green power certificate trading can appropriately alleviate the cash flow pressure brought about by the photovoltaic subsidy problem. The specific reason is that with the implementation of green certificate trading, power generation enterprises can choose to trade photovoltaic power generation through green certificates, directly obtaining power generation income, alleviating the cash flow pressure of power generation enterprises and the profit pressure caused by the arrears of renewable energy subsidies, and ensuring the investment return rate of the project. The above-mentioned "Notice" clearly points out that after wind power and photovoltaic power generation enterprises sell renewable energy green power certificates, the corresponding electricity will no longer enjoy the national renewable energy electricity price surcharge subsidy, and the green power certificates cannot be sold again after being purchased, which means that enterprises can only choose one between subsidies and green certificate trading. Ye Chao, a photovoltaic industry insider, told reporters, "Green power certificates will solve the cash flow problem for photovoltaic enterprises, because through the trading of green power certificates, enterprises with cost advantages will sell power generation indicators at a price no higher than the national subsidy, which can achieve rapid cash flow recovery, eliminating the pressure brought about by reliance on photovoltaic subsidies." Zhao Yuwen, a photovoltaic industry expert, said, "Subsidies and selling certificates are two choices for photovoltaic enterprises. In the case of serious arrears of photovoltaic subsidies, more photovoltaic enterprises will choose to sell certificates. Because selling certificates can effectively alleviate the cash flow of photovoltaic enterprises, more and more photovoltaic enterprises will choose to sell certificates instead of photovoltaic subsidies in the future. In the short term, green power certificates will alleviate the arrears of photovoltaic subsidies, and in the long term, they will promote the withdrawal of photovoltaic subsidies from the historical stage." However, a research report released by Zhongtai Securities believes that the issuance of green certificates indicates that the green certificate trading system has officially entered the practical operation stage, which has aroused widespread attention and heated discussion in the industry and investment circles, but the market has concerns about the unclear implementation details of the green certificate trading system and the lack of motivation for green certificate trading due to voluntary purchases.

Date:

2020/11/06

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