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cost of RES is usually much higher than the cost of
conventional energy. When compared to a coal power plant
of comparable size, in China the investment costs for a
hydropower plant are 1.2 times higher, for a biomass power
plant 1.5 times higher, for a wind power 1.7 times higher,
and for a solar (Photovoltaics) are 11-18 times higher.
In China, national development of technology is preferred
to technology import. The development of renewable energy
technology is much more expensive than development of
conventional energy technology and requires a long
development cycle as well as a big amount of financial
investment. The lack of technical standards in the field of
RES is also an important barrier to RES development.
In the absence of electricity market, clear rules for free
third party access, electricity company that enables RES
generators to connect to the grid and purchases the
electricity from them can dictate the prices at will. Usually
the price of electricity is too low even for large wind
projects, including some CDM projects. Even after China
issued the “Renewable Energy Act” [4], this phenomenon
still persists [5]. In WRC, small scale power generation
technique and solar photovoltaics power generation
technique should be listed as the first priority to RES
technology development.
Obviously, there is a big gap between the demand for
electricity and the purchase ability in no-electricity area of
WRC. The high cost of renewable energy and few users that
could afford it restrained the development of RES. At the
same time, the small size of the market is also preventing the
cost of renewable technology to decrease, completing the
vicious circle.
C. Management issues
In China, influenced by conventional ideas, the renewable
energy was classified as rural energy or regional energy for
quite a long time. To stimulate the development of
renewable energy was considered as a method to increase
poor farmers’ welfare and to improve the underdevelopment
of countryside in China. This management method caused
the renewable energy policy to deviate from conventional
energy policy. In China, the renewable energy projects were
operated and managed by different governmental sectors.
For example, small scale hydropower projects are governed
by Ministry of Water Resources or local governments. On
the other hand, while the commercial utilization of solar
energy is operated and managed by companies, the light
utilization projects of solar energy are managed and
operated by specific offices in different Ministry or
departments, such as National Development and Reform
Commission, State Economic and Trade Commission,
Ministry of Science and Technology, and Ministry of
Agriculture. The situation is similar in wind power
generation projects. While micro- and small scale wind
power facilities are in the hands of the commercial
companies, large scale wind power projects belong to
national and local governments. In biomass and biogas
projects, the National Development and Reform
Commission approve projects, Ministry of Agriculture
manages them, and the State Economic and Trade
Commission oversees them. There is no uniform
administration department, so it is difficult to operate. As the
main development region for renewable energy is in the
countryside, this administration method is bringing
inadequate results.
D. Financing Problems
Western Region is the most underdeveloped region of
China. Due to low energy prices, the rate of return on
investment is very low, decreasing the investment interest
from local government, industry groups and private. In most
WRC, the initial investment for renewable energy is higher
than conventional energy projects. At the same time, the
investment methods and financing channels are rudimentary.
For renewable energy projects there is no equal investment
system, which is customary to conventional energy projects.
Due to difficult financial situation in WRC, caused by low
income, creditworthiness and self-financing ability of
farmers, the RES projects are lagging behind.
E. Market Environment
Although there are rich RES resources in WRC, there are
also big gaps between the supply and the demand side in
RES market of WRC. On the supply side, the investors of
RES projects focus only on private profits without raising
awareness of RES in general public to establish stable
renewable energy market. On the demand side, the
renewable energy belonged to “rural energy” for quite a long
time, having the stigma of backwardness. Both sides lack
support in national policies, lack of stable financial sources
and virtually non-existent marketing.
III. PROPOSED RES SUPPORT POLICY FOR WRC
A. RES Support Policies in EU
A number of different instruments are being used in EU
member countries to support the development of RES, [6].
The most important ones are mentioned below:
Investment incentives: establish an incentive for the
development of renewable energy projects as a percentage
over total cost, or as an amount of Euros per installed KW.
The levels of these incentives are usually technologyspecific
and may vary significantly between regions.
Feed-in tariffs (FITs): are generation based fixed price
incentives that usually take the form of either a total price
for renewable production, or an additional premium on top
of the electricity market price paid to RES-E producers. A
specific price is normally set for several years that must be
paid by electricity companies to domestic RES-E producers.
The additional costs of these schemes are paid by suppliers
in proportion to their sales volume and are usually passed
through to the consumers.
Production tax incentives are generation-based pricedriven
mechanism that work through payment exemptions of
electricity taxes applied to all producers.
Tendering systems can either be investment focused or
generation-based, but in both cases they are capacity-driven
mechanisms. The state places a series of tenders for the
supply of renewable electricity, which is then supplied on a
contract basis at the price resulting from the tender. The
additional costs generated by the purchase of renewable
electricity are passed on to the end-consumer of electricity
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