Senior officials from the government's top pricing and tax decision-making group yesterday said that China has come up with a pricing system for electricity generated by renewable energy.

They were speaking at the International Forum on Tax and Fiscal Policies to Promote Sustainable Development, hosted by the Energy Foundation yesterday in Beijing.

The government will also raise the price of electricity (currently generated from non-renewable energy) for domestic customers from the start of next year by a small margin.

As for renewable energy, the new electricity pricing mechanism will accompany the country's first law on renewable energy, which will likely come into force in at the beginning of next year.

It will set the price at which energy providers can sell their power to grid companies.

This will vary from region to region due to differences in economic development, and will be within a range of 0.49 yuan to 0.69 yuan (0.06 US cents to 0.085 US cents) per kilowatt-hour (kwh), said Wang Zhongying, director of the centre for renewable energy development under the National Development and Reform Commission (NDRC).

NDRC Vice-Minster Zhang Guobao said at the forum that further tax incentives should be given to hydro and wind power producers.

The price-setting body at the NDRC is now collecting feedback on the proposal.

He said the additional costs incurred to produce renewable-energy electricity will be passed on to customers.

"There will be a slight (electricity) tariff increase next year, which will be less than 0.01 yuan (0.0012 US cents)," Wang Fengchun, deputy director-general of the research department under the environmental protection & resources conservation committee of the National People's Congress, told China Daily yesterday.

However, low-income citizens, residents in the Tibet Autonomous Region, residents of cities and counties that have separate electricity supply networks (off the national grid), and the agricultural sector, will not be subject to the additional charges, Wang Zhongying said.

According to the pricing proposal, the Minister of Finance will establish a special account and return the extra money to the country's grid companies, including the State Grid Corp of China and China Southern Power Grid, Wang Zhongying said. This will offset the higher cost of buying green electricity.

Wang Fengchun said there have been some complaints from the electricity sector that the new tariff for renewable energies is still too low, but Wang Zhongying yesterday said the new pricing system should be able to take effect next year as planned.

China has vowed to use renewable energy to supply 15 percent of the nation's electricity needs by 2020, compared with the current level of 7 percent.

(China Daily November 17, 2005)