Determining electricity prices through a bidding mechanism has become an international renewable energy pricing trend, and has led to a substantial reduction in the costs and electricity prices of wind, solar and other renewable energy sources that have achieved large-scale and commercial applications. This article summarizes the progress of the implementation of bidding and pricing mechanisms for wind power and solar power at home and abroad in the past two years, and comparatively analyzes electricity price levels; using survey data, it analyzes the impact on renewable energy from the aspects of resource conditions, investment and operation and maintenance levels, taxation and financial policies, etc. The key factors of power generation cost and possible cost reduction space in the future, and suggestions on policy measures to reduce the cost of renewable energy power generation in my country are put forward.
Foreword
In recent years, global wind power, solar power and other renewable energy technologies have continued to advance, industries have developed rapidly, and application scale has continued to expand, resulting in a significant decrease in the cost of renewable energy power generation. Renewable energy power generation support policies have also changed from a highly guaranteed fixed on-grid electricity price mechanism to diversified mechanisms such as auction bidding, premium subsidies, and green power certificates to promote their participation in market competition. Since 2014, the bidding mechanism has determined grid-in tariffs for renewable energy and has been adopted by more and more countries and regions. Its implementation has led to a substantial reduction in the cost and price of wind power and solar power. In some countries, the bidding price of renewable energy is the same as that of conventional energy. Compared with power generation, it is already economical and market competitive. From 2015 to 2017, our country conducted photovoltaic power generation and development enterprise bidding through photovoltaic leading bases. In 2017, it implemented the first batch of 13 wind power projects to demonstrate grid parity (i.e. zero electricity price subsidy). However, compared with international levels , domestic costs and electricity price levels are relatively high. This article summarizes and compares the domestic and foreign renewable energy bidding price levels in the past two years, analyzes the main factors affecting the cost of renewable energy from the aspects of resource conditions, investment and operation costs, tax and financial policies, etc., and proposes measures to reduce costs and electricity prices.
1. Domestic and foreign renewable energy power generation bidding progress and electricity price levels
In 2017, more than 40 countries around the world implemented renewable energy power generation bidding mechanisms. In terms of technology, photovoltaic power generation bidding is applied in the most countries, followed by onshore wind power, offshore wind power, photothermal power generation , etc.
(1) Photovoltaic power generation
Photovoltaic power generation bidding prices have hit new lows in recent years. In some countries with abundant solar energy resources, such as Chile and India, photovoltaic power generation has become the lowest price among all new power sources. At the end of 2016, the bidding electricity price for a 1.17 million-kilowatt photovoltaic power generation project in Abu Dhabi was 2.42 cents/kWh. After taking into account the summer incentive electricity price, the actual electricity price was 2.92 cents/kWh, which was the lowest in the world that year.
In October 2017, the lowest bidding price for a 300,000-kilowatt photovoltaic power generation project in Saudi Arabia reached 1.786 cents/kWh. In 2017, India’s lowest electricity bidding price was 3.8 cents/kWh, generally ranging from 4 to 5 cents/kWh. In the Americas, Argentina ’s winning electricity price was around 5.5 cents/kWh; Chile’s winning electricity price reached 2.91 cents/kWh; Mexico, due to its renewable energy green power certificate policy, in November 2017, the winning electricity price was as low as 1.77 US dollars. Cents/kWh, even with the income from renewable energy green power certificates (about 3 cents/kWh), the actual income of photovoltaic power generation projects is only equivalent to about RMB 0.3/kWh; the power purchase agreement (PPA) of U.S. photovoltaic power generation ) Electricity prices are mostly around 5 cents/kWh. European solar resource conditions are average, but electricity prices have also dropped significantly through bidding. The average winning price of photovoltaic power generation in Germany has gradually dropped from 9.10 euro cents/kWh in the first round in April 2015 to 4.91 euro cents/kWh in the ninth round in October 2017. This level is already lower than the average purchase price of the German power grid. electricity prices.
Since 2015, my country has implemented bidding to determine project development enterprises for leading photovoltaic bases. Since 2016, it has fully implemented project bidding to determine development enterprises and on-grid electricity prices for ordinary photovoltaic power stations and leading photovoltaic funds. The electricity prices of the second batch of photovoltaic leading base projects dropped significantly that year, and were generally 415% to 35% lower than the benchmark electricity price for photovoltaic power generation in the same region, with most of them ranging from 0.50 to 0.75 yuan/kWh (equivalent to 7.5 to 11.5 cents/kWh). ), the lowest price reaches 0.45 yuan/kWh.The benchmark electricity price of photovoltaic power generation has also shown a downward trend year by year in recent years, with an annual decrease of around 0.1 yuan/kWh. In 2017, it was 0.65-0.85 yuan/kWh (equivalent to 10-13 cents/kWh). Whether it is the bidding price or the benchmark price, my country's photovoltaic power generation price level is higher than the bidding price of most countries.
(2) CSP
In 2017, the international bidding price for CSP also entered a rapid downward trajectory. In June and September, a consortium composed of Saudi Arabian Electric Power Engineering Company (ACWAPower), Shanghai Electric and American Bright Source won the bid for the 200,000-kilowatt and 700,000-kilowatt tower solar thermal power generation projects in Dubai, with electricity prices of 9.45 cents/kWh respectively. and 7.3 cents/kWh; in August, the US company SolarReserve won the bid for a 150,000-kilowatt solar thermal power generation project in South Australia at a price of 6 cents/kWh, and in October it won the bid for a solar thermal power generation project in Chile with an electricity price of less than 5 cents/kWh. Power generation projects. my country launched the first batch of 20 photothermal power generation demonstration projects in 2016, with a total installed capacity of 1.345 million kilowatts. The unified electricity price for demonstration projects determined through competitive allocation is 1.15 yuan/kWh.
(3) Onshore wind power
Brazil has implemented a bidding mechanism in 2009. In 2014, the bidding price of onshore wind power reached 5.6 cents/kWh, and has continued to decline since then. In 2017, the Chilean wind power bidding price reached 4.52 cents/kilowatt, which was lower than the gas power, coal power, and hydropower bidding in the same period. Peruvian wind power bidding price is 3.7 cents/kWh, which is lower than hydropower bidding in the same period (4.6 cents/kWh). In addition, the U.S. wind power PPA price is as low as 2 cents/kWh, with most projects around 3 cents/kWh; the lowest electricity prices in Canada and Mexico are 6.6 cents/kWh and 3.62 cents/kWh respectively. In October 2017, the bidding price for a 1 million kilowatt wind power project in India was 4.1 cents/kWh. my country implements a benchmark electricity price policy for wind power. The electricity price level in 2017 was 0.47 to 0.60 yuan/kWh (equivalent to 7 to 9 cents/kWh). Although the first batch of 13 wind power projects began to implement grid parity in June 2017 ( (i.e. zero electricity price subsidy) demonstration, but compared with international levels, overall domestic costs and electricity prices are on the high side.
(4) Offshore wind power
International offshore wind power costs and electricity prices are declining rapidly. In 2017, the price of offshore wind power approved by the UK to be connected to the grid in 2022-2023 was 0.0575 pounds/kWh, and the price of new offshore wind power in the UK in 2017 was already lower than that of nuclear power. In November 2016, Swedish energy company Vattenfall Vindkraft A/S won the bid for the Danish offshore wind power project, with an electricity price of 0.372 Danish kroner/kWh (equivalent to 5.39 cents/kWh), becoming the lowest electricity price for offshore wind power in the world at that time.
In April 2017, Germany held a tender for four offshore wind power projects with a total installed capacity of 1.49 million kilowatts. Denmark's DONG Energy and Germany's EnBW won the bid with the lowest bid price. Middle East Energy's bid price was 0. That is to say, there is no electricity price subsidy for the project, and the revenue only comes from the sale of electricity in the electricity market. my country's current benchmark electricity price levels for intertidal wind power and offshore wind power are 0.75 yuan/kWh and 0.85 yuan/kWh respectively (equivalent to 11.5 to 13 cents/kWh).
2. Analysis of the main factors that determine the difference between domestic and foreign renewable energy power generation costs and electricity prices
Comparing the above electricity price levels, it can be seen that my country's renewable energy electricity prices are generally at a relatively high level compared with the international level. Table 1 lists the levelized costs and composition of some domestic and foreign photovoltaic power generation and offshore wind power projects calculated based on survey data. Through comparative analysis, the factors that affect the cost of renewable energy power generation projects and cause differences in domestic and international electricity prices are mainly in the following aspects.
(1) Resource conditions
Natural resource conditions are the most basic factors that affect the cost and electricity price of renewable energy power generation projects such as wind and solar, and are also basic conditions that cannot be changed. According to Table 1, the total annual solar radiation of Argentina’s photovoltaic power generation projects is about 2,350 kWh/square meter, which is 1.25 times that of my country’s Class I solar resource areas. The cost gap caused by resource conditions is 20% to 30%. The unit kilowatt investment and annual unit kilowatt operation and maintenance cost of German offshore wind power projects are respectively 2.3 times and 2.6 times that of offshore wind power projects in my country's eastern coastal areas. However, the annual equivalent utilization hours of wind power in the former are 1.9 times that of the latter. Ultimately, the two The LCOE of projects connected to the grid three years apart is not much different.
(2) Initial investment
The initial investment mainly depends on the price of equipment and raw materials, land cost and labor costs. In the second half of 2017, the initial investment levels of domestic photovoltaic power generation and wind power were around 6,500 yuan/kilowatt and 7,200 yuan/kilowatt, which were about 10% higher than foreign bidding projects. Taking the photovoltaic power generation project in the United Arab Emirates as an example, its bidding price set a world record of less than 3 cents/kWh in 2016. One of the key factors is that the total unit investment is equivalent to less than RMB 5,000/kWh. The UAE project is expected to be connected to the grid in the first half of 2019. The investment level of European photovoltaic power generation units in 2017 has been equivalent to RMB 5,000 to 5,500 yuan/kilowatt. The investment level is likely to decline in the next year or so. In addition, The scale of the UAE project is large (the installed capacity of a single project is 1.17 million kilowatts), so an initial investment level of less than 5,000 yuan/kilowatt is feasible. Reducing initial investment can effectively reduce power generation costs and electricity prices. Based on existing domestic policy conditions, if the initial investment of photovoltaic power generation units is reduced from the current 6,500 yuan/kilowatt to 5,000 yuan/kilowatt, the photovoltaic power generation price in my country's Class I areas can be reduced from The current 0.55 yuan/kWh has been reduced to 0.43 yuan/kWh.
(3) Policies
Policies have the greatest impact on the cost and price of renewable energy power generation projects, including power purchase agreements, loans, taxes, land, grid connection and other policies.
First, the term of the power purchase agreement. Generally, the longer the term of the power purchase agreement, the lower the levelized cost. Currently, the term of the power purchase agreement for foreign projects ranges from 15 to 25 years. The execution period of my country's renewable energy benchmark electricity price is generally 20 years. The power purchase agreement or The cost gap between domestic and foreign countries caused by the implementation period of electricity price policy is relatively small.
The second is the loan interest rate. Loan interest rates have a greater impact on project costs. The annual loan interest rates for renewable energy projects in Mexico, the United Arab Emirates, Argentina and some European countries are generally within 2.5%, and the corresponding financial cost of photovoltaic power generation is equivalent to RMB 0.03 to 0.05 yuan/kWh. In my country, the current annual interest rate for 15-year long-term loans is 4.9%, which brings financial costs of more than 10 cents/kWh. If the annual interest rate of my country's 15-year long-term loans is reduced by 1.5 percentage points from 4.9%, the financial costs of renewable energy companies can be reduced by about 1/4; if it further drops to the international level of about 2.5%, the corresponding Financial costs can be controlled at around 0.05 yuan/kWh.
The third is tax policy. Taking photovoltaic power generation as an example, the tax level of international bidding projects is equivalent to RMB 0.02 to 0.05 yuan/kWh. The Abu Dhabi bidding project is completely tax-free. However, currently, Chinese companies need to pay 17% value-added tax and 10% VAT surcharge and 25% corporate income tax (renewable energy power generation can enjoy the "three exemptions and three half reduction" income tax benefits), the total tax burden in the power generation cost is 0.08 to 0.09 yuan/kWh. At present, my country implements a 50% VAT refund policy for photovoltaic power generation. However, this preferential policy will expire at the end of 2018. Even if the policy is considered to be extended, the various tax burdens will still be at least 0.06 yuan/kWh, which is still relatively biased. high.
Fourth, land costs. At present, except for the Abu Dhabi bidding project, which is exempted from land use fees internationally, the converted cost of land fees in many countries is mostly around RMB 0.01/kWh, while my country’s annual land use fee (considered at 400 yuan/acre per year) increases After the initial land acquisition and vegetation compensation costs are added, the cost can reach 0.02 to 0.03 yuan/kWh, and as high as 0.05 yuan/kWh in some areas. Land use fees have a greater impact on the cost of renewable energy power generation. If the annual land use fee for photovoltaic power generation is reduced from 400 yuan/mu per year to 200 yuan/mu per year, the cost of photovoltaic power generation in Class I areas in my country can be reduced by at least 0.01 yuan/kWh.
Fifth is the grid connection policy. Internationally, the grid connection fees paid for renewable energy power generation projects account for about 1% to 3% of the total investment, while the grid connection fees that my country needs to pay account for about 5% of the total investment. If the Renewable Energy Law and related regulations are strictly implemented and the investment responsibilities of renewable energy development companies and power grid companies are clearly divided, the LCOE and electricity price of renewable energy power generation in my country can be reduced by 0.01 to 0.02 yuan/kWh.
Overall, among the various factors that affect the cost of renewable energy power generation and the differences in electricity prices at home and abroad, the initial investment, operating costs, power purchase agreement period, etc. have little difference. The objective differences in natural resource conditions have little impact on the The cost of power generation has a certain impact, and supporting policies in terms of loans, taxes, land, and grid connection are the main factors in reducing cost space. Taking photovoltaic power generation as an example, the electricity prices of typical projects in Abu Dhabi and my country's Class I areas are equivalent to RMB 0.20 yuan/kWh and 0.55 yuan/kWh respectively based on actual conditions. However, if based on the solar resource conditions in my country's Class I areas, In 2017, based on the calculation of domestic photovoltaic power generation investment and operation and maintenance levels and the policy conditions of the Abu Dhabi project, the corresponding electricity price was only 0.31 yuan/kWh.
3. Suggestions on policy measures to reduce the cost of renewable energy power generation
In order to effectively reduce the cost and electricity price of domestic renewable energy power generation, we need to focus on two aspects: first, continue to promote cost reduction through technological progress and industrial upgrading; second, implement Policies that are compatible with the development of renewable energy, eliminate unreasonable costs attached to renewable energy power generation as soon as possible, and eliminate unreasonable policies. Specific policy measures are recommended as follows.
(1) Continue to implement the competition mechanism to promote technological progress and industrial upgrading
It is an international trend to adopt a competitive bidding mechanism for renewable energy technologies that have mature technology and achieved large-scale development. my country's adoption of a competitive bidding mechanism is conducive to stabilizing the development of renewable energy. pace, optimize layout, and achieve the country’s non-fossil energy development goals in 2020 and 2030. Through bidding, we can understand cost and price requirements, promote technological progress, industrial upgrading, reduce costs, and achieve clean energy transformation at lower costs.
It is recommended that based on the implementation results of the first batch of wind power subsidy-free pilots in 2017, the wind power subsidy-free pilots should be continued during the "Thirteenth Five-Year Plan" period, the scope and scale of the pilots should be expanded, and photovoltaic power generation subsidy-free pilots should be launched in a timely manner. Promote the use of competition mechanisms to reduce the development costs of onshore wind power and photovoltaic power generation, select project owners through electricity price or subsidy level bidding, eliminate local unreasonable costs, and remove obstacles to policy implementation. Based on the situation of non-subsidy pilots and competitive electricity prices, timely adjust electricity prices and subsidy reduction ranges to achieve the same platform competition between wind power and local coal-fired power generation in 2020, reduce the price level of photovoltaic power generation by more than 50% on the basis of 2015, and achieve realization on the power consumption side. The goal of affordable Internet access.
(2) Standardize the implementation of policies and eliminate the non-technical costs of renewable energy power generation
Renewable energy sources such as wind and solar energy, as clean and zero-carbon energy sources during the operation period, have negative impacts on the current mining and utilization of fossil energy, carbon emissions and pollutant emissions. If externalities cannot be fully incorporated into costs, they should be supported by differentiated electricity price policies. But on the other hand, just because renewable energy power generation has received national policy support, all parties should not regard it as "Tang Monk Meat". Policies must be standardized and implemented to eliminate unreasonable factors attached to the cost of renewable energy power generation and reduce the cost of non-renewable energy power generation. Technology costs.
First, reduce grid connection costs and divide the investment responsibilities of development companies and power grid companies in strict accordance with the Renewable Energy Law and relevant regulations. The second is to reduce land use costs, strictly implement the State Council's "Several Opinions on Promoting the Healthy Development of the Photovoltaic Industry" and other relevant national policies and regulations, combine the particularity of renewable energy land use, refine land use policies, clarify land use categories and corresponding land acquisition compensation , annual usage fee standards, standardize implementation, and strengthen supervision. The third is to strictly prohibit local unreasonable additional fees. For example, additional investments other than the main investment in renewable energy projects cannot be imposed on development companies. In renewable energy power generation projects related to abandoned land management such as mines, land pretreatment and fees, etc. These need to be resolved before project development and should not be borne by the development company. The fourth is to actively take measures to gradually reduce the proportion and scope of wind and solar abandonment, and effectively implement the full guaranteed purchase system for renewable energy. For the electricity within the minimum guaranteed hours, power grid companies must purchase the electricity at full price; for the limited power within the guaranteed hours, power grid companies should be required to pay the electricity bill on a "take or pay" basis. Fifth, the issue of renewable energy price subsidy arrears should be resolved as soon as possible.
(3) Innovate and implement policy mechanisms suitable for the development of renewable energy
The first is to implement and implement the pilot work of distributed renewable energy to participate in market-based transactions in conjunction with the reform of the power system; the second is to innovate credit policies, overcome financing obstacles, and solve the problem of private The problem of high actual loan interest rates for development companies and distributed renewable energy development projects. Reduce financing costs, reduce the financing costs of distributed renewable energy projects through credit enhancement, and use green finance and project equity and debt financing to reduce the financing costs of large power stations. The third is to implement tax policies. For example, in the economically developed eastern and central regions, we should explore the implementation of income tax reduction or tax refund for renewable energy power generation, and make it clear that the policy of 50% immediate VAT refund for photovoltaic power generation is a long-term policy. The fourth is to launch a renewable energy power quota system and mandatory trading of green certificates as soon as possible, alleviate the short-term and finally solve the problem of renewable energy subsidy funding gaps and power rationing in the mid-term, ensure that renewable energy electricity prices and costs fall simultaneously, and realize the withdrawal of subsidy policies as soon as possible.
Source: "China Prices" Author: Shi Jingli, Energy Research Institute of the National Development and Reform Commission
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