China’s National Development and Reform Commission (NDRC) has announced that Chinese coal-fired power producers will be guaranteed payments based on their installed capacity, starting in January 2024. With this move, the NDRC aims to ensure stability of supply in the country while it transitions towards renewable power sources.
The payment will take the form of a tariff paid to coal-fired power producers by the grid company, which will be collected through a surcharge from industrial and commercial end-users. The capacity payments will be calculated based on fixed costs of CNY330/kW/year (US$45.25/kW/year) for coal power plants. According to the NDRC, coal-fired power plants in most of China's regions will be able to recover around 30% of their capital costs between 2024 and 2025 (up to 50% in some regions). From 2026 onwards, the capacity payment rate will be increased to at least 50% in all regions of China.
In 2022, coal-fired power represented 46% of China’s installed capacity with nearly 1,174 GW and 62% of its power generation with 5,494 TWh.
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