Hogan Lovell OffshoreBook 2023 230809 OnlinePDF - Flipbook - Page 56
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4. OFFTAKE ISSUES
4.1 Offtake, remuneration and
tariff scheme
As explained above in section 2.3, the Grid
Company is required to purchase the entire
output of the offshore wind power plants
connected to its grid. For this purpose, the
Grid Company and the developer of the
offshore wind power plant enter into a PPA
after the construction of the plant. The PPA
is drafted using the standard forms published by the NEA and the State Administration
for Industry Commerce (the predecessor of
the SAMR), which recommend that the Grid
Company and the developer sign a framework PPA agreement applicable for a fixed
period and a separate PPA annually.
The price at which the electricity is sold to
the Grid Company is fixed during an initial
period at the price set through the Competitive Allocation Scheme; thereafter, if the
province sets a lower benchmark tariff after
the project is implemented, the tariff under
the PPA is automatically reduced to the
benchmark tariff of the province.
The plant receives the whole amount of the
On-Grid Tariff (including the Premium) from
the Grid Company, and the Grid Company in
turn applies to receive the reimbursement
of the Premium from the Renewable Energy
Development Fund.
China
4.2 Consequences of a project delay
As stated above in section 2.4, the Local
NEA revokes the Project Approval and the
Local SOA revokes the Certificate of Use of
Sea Areas if the construction of the project
(i.e., the construction of the foundation of
the first WTG) is not commenced within a
specified time period after having obtained
the Project Approval.
In accordance with the Wind Power Interim Measures, the PPA is usually entered
into between the developer and the Grid
Company after the completion of the construction of the offshore wind power plant.
Therefore, the PPA may not deal with the
consequences of delays in the construction
of the project.
4.3 Examples of actual and future tariffs
The Bid Tariff for the first offshore wind
power project awarded under the Competitive Allocation Scheme in Fengxian site,
Shanghai Municipality on 12 September
2019 is RMB 0.7388/kWh,16 which is lower
than the Guiding Wind Power Tariff. A
slightly higher Bid Tariff was awarded for
subsequent offshore wind power projects
in 2019, as reflected in the trends illustrated
below. However, it is expected that the Bid
Tariff may actually decrease in the long term
given that the Bid Tariff cannot exceed the
Guiding Wind Power Tariff and the Chinese
government plans to progressively reduce
the Guiding Wind Power Tariff.
16 "The Results of Competitive Allocation for Fengxian Offshore Wind Power", published by Shanghai Development and Reform Commission on 28 August
2019 (http://fgw.sh.gov.cn/gqgg/20190828/0025-36568.html).
