China braces itself for feed-in tariff cut for wind power generators

Due to government's grid-parity tariff target.

With the China government’s target of a grid-parity tariff by 2020, it has been predicted that the market will expect a feed-in-tariff (FiT) cut for wind-power generation.

According to a research note from Nomura, wind operators also acknowledge the possibility of a tariff cut in future on the basis of a drop in wind-equipment costs.

However, the report said that these wind operators believe any tariff adjustment is unlikely in the short term due to the current grid curtailment issue, the government’s promotion of clean energy usage, as well as the loss of clean development mechanism (CDM) income going forward.

The Nomura report also noted that, in addition, the operators do not expect the tariff cut to be on a similar magnitude across the whole of China (given the IRR varies significantly across different regions), but instead they expect the FiT to be either reduced by area or for it to be adjusted according to the wind resources and return profile.