Policy impact of cancellation of wind and photovoltaic subsidy on power generation companies in China

Abstract

Renewable energy is environmentally friendly and with subsidies stimulating, global wind power and photovoltaic (PV) power generation industries are developing rapidly. As the biggest renewable energy generation country, China's wind power, and PV power generation industries have high growth and are suffering from the subsidy gap. Therefore, China's government gradually reduced and canceled the subsidies. The cancellation of subsidies brought challenges and opportunities to power generation companies.The purpose of this study is to explore the impact of subsidy cancellation on wind power, PV power and, coal-fired power generation companies. Firstly, we reviewed the subsidy policy history and then focused on the background of subsidy cancellation. Secondly, the impact of subsidy cancellation on wind power generation hours was proved using the difference-in-differences (DID) method. And the benefits of different trading methods of wind power and PV power existing units were calculated. The building cost caps of the future wind power and PV power unsubsidized units were calculated for different areas. The option of the existing units whether to waive subsidies and the investment advice in each area were proposed. Then, the impact on coal-fired power companies’ generation and revenues were analyzed. Finally, policy suggestions were discussed.