Exploring Scope Of Chinese Corporate RE Market

• The CRS report Accelerating Corporate Renewable Energy Engagement in China explores the corporate renewable energy procurement scene in China and claims C&I sector can contribute to national climate goals with uptake of clean energy
• Current measures in place in China are interesting but not enough to inspire the corporate sector in adopting clean energy on a big scale
• Government needs to have policy structure in place and simplify the transaction mechanisms to facilitate its growth
• It also recommends FIT, renewable energy quota system, and emissions trading scheme to be helpful in furthering the voluntary corporate market for renewal energy

The world's largest renewable energy market China could do with more renewable energy in the country in order to bring down its carbon emissions and also curb the problem of renewable energy curtailment. Voluntary procurement of renewable energy by commercial and industrial (C&I) segments could be a major contributor to speed up the development of renewables.

This is the main focus point of the Google funded report Accelerating Corporate Renewable Energy Engagement in China published by the Center for Resource Solutions (CRS). While the US and Europe are showing increasingly maturity in their corporate renewable power procurement, China shows mostly potential; however, several multinational corporations are starting to purchase renewable electricity in the country to make use of competitive pricing and also encourage their local supply chain to go renewable as well.

One big challenge in the growth of this business segment that the authors of this report assess is the lack of products that meet key attributes and criteria for voluntary market customers which they define as exclusive ownership of usage claims and environmental attributes, regulatory surplus, attractive prices and market impact.

The Chinese government has started to support corporate RES power sourcing through new and existing mechanisms such as green energy certificates (GEC), onsite renewable installations, direct investment, direct power purchasing, retail green power, coal swaps and International Renewable Energy Certificates (I-REC).

Yet, there are shortcomings in all these measures that the report covers, which range from high prices, capital requirements, FIT not available for all kinds of renewable installations, I-RECs not recognized by the government, complicated transaction pathways, no proper mechanism to substantiate claims for retail green power, among others.

The report recommends feed-in-tariffs (FIT), renewable energy quota system emissions trading scheme to be helpful in furthering the voluntary corporate market for renewal energy.

Demystifying inter and intra provincial transaction mechanisms and simplifying procedures are expected to go a long way in facilitating the growth of direct power purchases and encourage private investment.

"Allowing transactions that are surplus to regulation and preventing double counting are key to successful voluntary activity. As an accounting mechanism, the GEC could be further expanded for utilization with all types of voluntary renewable energy transactions and de-coupled from only FIT-eligible projects to help ensure more competitive pricing," explain the authors of the report.

The Accelerating Corporate Renewable Energy Engagement in China report is available on CRS website in both English and Chinese for free download.

The report comes at a time, when the Chinese market is much slower than expected as the country's solar market is transitioning from lucrative FITs to subsidy free installations. As large scale solar is being encouraged by the government to compete with conventional power sources without state subsidies, corporate procurement needs to play a key role for the next solar growth phase in China (see China Announces Further RE Subsidies Cuts For 2020).