Compiled by Caijing staff

(Caijing.com.cn) China has set the benchmark on-grid wind power price at 0.51 to 0.61 yuan per kilowatt-hour for onshore projects, the National Development and Reform Commission said.

All newly-built onshore projects will receive the benchmark rate for their output from transmission companies, the state economic planner said in a statement on its website on July 24.

The rate, which is set at 0.51, 0.54, 0.58 and 0.61 yuan, will vary per region. Prices for offshore wind power will be determined separately.

"The benchmark rate will establish consistent pricing, foster clear expectations and facilitate investment in the wind power sector," the NDRC said.

The new benchmark tops most prices received for wind power over the years, raising the likelihood that new projects will be viable. The China Daily has reported that the historical price range for wind is 0.38-0.52 yuan, against an estimated breakeven level of about 0.60 yuan.

Earlier this month, the newspaper reported that the on-grid tariff for the 10 gigawatt wind farm being developed in Jiuquan, in the northwestern province of Gansu, was set at 0.526 yuan. The Jiuquan project is China's first 10 gigawatt project and the first of seven of such size to be built by 2020. 

Under the previous pricing system, wind power developers won project rights by offering the lowest rate for generated power. The new benchmark system effectively eliminates the downward pressure on on-grid prices exerted by bid competition and allows project developers to plan wind farms around a known price.

China is seeking to increase the contribution of renewables in its energy mix and has set a wind power capacity target of 100 gigawatt by 2020, eight times current levels. But the industry is beset with fundamental problems like the non-viability of many wind farms and the large distances separating industrial centers from the best wind sites in northern and western China.

China's top power producers including Guodian, Huaneng, China Power Investment are accelerating their investments in wind power to diversify away from coal-fired operations.

1 yuan = 14 U.S.cents

Full article in Chinese: http://www.caijing.com.cn/2009-07-26/110214206.html