The Paper:

With the arrival of the grid-parity era, sectors involved in renewable energy no longer need subsidies but many ongoing renewable energy projects face delayed subsidy payment, resulting in operation difficulties among some companies. How will you deal with the subsidy payment backlog? Meanwhile, how can Renewable Energy Certificates (RECs) play a greater role? Thank you.

Zhang Jianhua:

Thank you for your question. It is indeed a crucial and tricky issue. We will invite Mr. Li to answer the question.

Li Chuangjun:

Thank you for your question. China has made remarkable achievements in renewable energy development over the years but there are indeed problems in the development process. These include insufficient subsidy funds and the delayed payment of renewable energy subsidies like you mentioned. China has attached great importance to solving these problems. Working with relevant departments, the NEA has actively explored various means to solve the problem of overdue subsidies. Recently, the NDRC, MOF, PBOC, CBIRC, and NEA jointly issued a notice on guidance of increasing financial support to promote the healthy and orderly development of wind power and photovoltaic power industries. The notice provides solutions for liquidity risks experienced by relevant companies that are resulted either from overdue subsidies of renewable energy or delayed payment of the subsidies. The main measures are as follows:

First, financial institutions are encouraged to negotiate with renewable energy enterprises to extend or renew loans per commercial principles. At present, some renewable energy enterprises face a relatively tight cash flow due to delays in subsidy payments, yet these subsidies do exist and are guaranteed via government credit. Therefore, we require financial institutions to extend or renew loans or adjust repayment schedules or terms according to the project's progress and cash flow based on negotiation between the banks and companies. This is to ensure liquidity to in the companies.

Second, financial institutions are encouraged to issue loans for confirmed projects that are included on the subsidy list. Earlier, the MOF and several other departments vetted the qualifications of companies on the subsidy list. For those qualified but have yet to receive a subsidy from the government, the financial institutions can determine the loan size based on subsidy certification and other credit limit increase measures, as determined by the principles of marketization and rule of law.

Third, companies are encouraged to ease interest payment burdens via the trading of RECs. Together with other relevant departments, we are studying the possibility of issuing RECs to companies based on loan contracts and other documents filed by companies. This will allow them to trade RECs to reduce the pressure of paying interest, which is also an effective means for companies to reduce their burden.

Fourth, we will work to ensure the collection of all receivables related to renewable energy surcharges. The current levy rate on renewable energy surcharges has not reached 100%. We hope to levy all receivable surcharges in the front end to expand the source and scale of subsidy incomes.

Fifth, we will optimize the management of subsidy funds. Priority will be given to granting subsidies to projects and companies that voluntarily switch to achieve grid price parity, and will simultaneously increase credit support for said projects and companies.

The above are several methods to deal with the overdue subsidies. For the next step, we will work with relevant departments to further implement various policies to gradually alleviate and finally solve the problem of new energy subsidy arrears. Thank you.