The National Energy Administration (NEA) and State Grid Corp. of China (SGCC) are currently engaged in discussions regarding the potential adjustment of the existing cap on photovoltaic (PV) curtailment, responding to mounting pressure from burgeoning renewable energy projects struggling to access grid connections.
At present, solar plants are subject to a maximum curtailment of 5% of their output, but authorities are contemplating raising this threshold to alleviate grid congestion.
Implemented by China’s National Development and Reform Commission (NDRC) and the NEA in 2018, the 5% curtailment cap for wind and solar projects was designed to maintain a minimum utilization rate of 95% for such projects in designated Chinese provinces. While initially aimed at ensuring the efficient utilization of renewable energy assets and safeguarding investment returns for power companies, the stringent enforcement of this policy has impeded the expansion of renewable energy projects, particularly in regions grappling with high abandonment rates. Consequently, the approval and development of new projects have been severely hindered.
Despite advancements in solar technologies leading to reduced installation costs and improved returns on investment for power projects, state-owned energy companies continue to face obstacles due to existing curtailment regulations when establishing installation targets. This bottleneck has resulted in numerous projects struggling to obtain construction approval. Additionally, the slow progress of the State Grid’s ambitious ultra-high voltage transmission network, which requires substantial investment, has not effectively addressed the issue.
Simultaneously, several local governments have expressed support for increased consumption of renewable energy. Notably, the Jiangxi Energy Bureau has proposed policies to incentivize the expansion of distributed rooftop PV, while the government of Tibet has initiated programs for the development of new energy sources in the region to expedite grid-connection projects.
Consequently, there is a growing consensus advocating for an expansion of the curtailment limit to stimulate industry growth. Industry insiders anticipate that this adjustment could lead to a significant increase in permits for new renewable energy installations, encompassing both wind and solar projects. While this may result in lower returns on investment for projects, the primary objective is to enhance installation rates, considered vital for the sustainable growth of the industry in 2024 and beyond.