China: Renewable Energy Comparative Guide

1 Legal and regulatory framework

1.1 What role does the state play in the renewables industry and which national legislative and regulatory provisions have relevance for the renewables industry in your jurisdiction?

China has outlined its strategic direction for establishing a modern energy system in its 14th Five-Year Plan. This vision was further elaborated in the 14th Five-Year Plan for a Modern Energy System, jointly issued by the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA). Additionally, the NDRC, the NEA and other central government bodies – including the Ministry of Finance, the Ministry of Natural Resources, the Ministry of Ecology and Environment, and the Ministry of Housing and Urban-Rural Development – have collaborated to formulate the 14th Five-Year Plan for Renewable Energy Development. For more specific information regarding the responsibilities of these government agencies, please see question 1.3.

The Renewable Energy Law, enacted in 2006 and amended in 2009, serves as the primary legislation governing renewables. It establishes a general framework for the development and utilisation of non-hydro renewable energy sources such as wind, solar, water, biomass, geothermal and ocean energy. Other relevant primary legislation includes:

• the Electric Power Law;
• the Water Law;
• the Land Administration Law; and
• the Environment Protection Law.

Secondary legislation encompasses regulations issued by the State Council, as well as rules and measures issued by the NDRC, the NEA and other government agencies. These regulations and measures pertain to various stages of a renewable energy project's lifecycle, including:

• project approval or filing;
• supply chain management;
• construction and operation; and
• the consumption and grid connection of electricity generated from renewable sources.

For instance, the NDRC introduced the Administrative Measures for Guaranteed Purchase of Renewable Energy-Generated Power in Full Amount in 2016 to enhance and prioritise the procurement of non-hydro renewable power.

1.2 Which bilateral or multilateral instruments or treaties with effect in your jurisdiction have relevance for the renewables industry?

China's renewables industry is heavily influenced by the Paris Agreement, a multilateral treaty addressing climate change. China aims to peak carbon dioxide emissions before 2030 and achieve carbon neutrality by 2060. By 2030, the country targets a non-fossil fuel proportion of around 25% in primary energy consumption, along with a total installed capacity of over 1.2 billion kilowatts for wind and solar power.

China actively collaborates with multilateral frameworks and international organisations to promote renewable and clean energy development:

• engaging with platforms such as:
• • the G20, the China-Association of Southeast Asian Nations (ASEAN) partnership;
  • ASEAN Plus Three;
  • the East Asia Summit;
  • the Forum on China-Africa Cooperation;
  • the BRICS (Brazil, Russia, India, China, South Africa);
  • the Shanghai Cooperation Organization; and
  • the Asia-Pacific Economic Cooperation; and
• partnering with:
• • United Nations agencies;
  • financial institutions such as the Asian Development Bank and the Green Climate Fund; and
  • energy-focused organisations such as the International Energy Agency and the International Renewable Energy Agency.

Emphasising bilateral and regional cooperation, China works with countries including Russia, Pakistan, India, Brazil, South Africa, the United States, Japan, Germany, France, the European Union and ASEAN nations. These collaborations facilitate:

• knowledge exchange;
• best practice sharing; and
• technological advancements in renewable energy.

Initiatives such as the Belt and Road Energy Partnership and the proposed Global Clean Energy Cooperation Partnership demonstrate China's commitment to green energy cooperation.

Foreign investors in China's renewables sector may also benefit from numerous bilateral and multilateral investment treaties, providing relevance and legal protection for their investments.

1.3 Which national regulatory bodies are responsible for enforcing the applicable laws and regulations? What powers do they have and what is their general approach in regulating the renewables industry?

The enforcement of renewable energy-related laws and regulations in China is carried out by the NDRC and the NEA, with the support of other key ministries. The NDRC – a ministerial department of the State Council – is responsible for macroeconomic planning, investment monitoring and industrial policy setting. The NEA – a state bureau under the NDRC – formulates and implements energy development strategies, plans and policies.

The NDRC and the NEA have the authority to issue guidance, policies and opinions to regulate and supervise the renewables industry. They work closely with other ministries to coordinate and promote renewable energy development:

• The Ministry of Finance plays a crucial role in implementing financing policies for the sector, including tax incentives and special funds to support renewable energy projects.
• The Ministry of Natural Resources regulates the use of land and natural resources for renewable energy projects.
• The Ministry of Ecology and Environment assesses the ecological and environmental impacts of renewable projects, ensuring compliance with environmental standards.
• The Ministry of Housing and Urban-Rural Development formulates policies for sustainable urban development, including energy efficiency and environmental protection in construction and affordable housing initiatives.

These regulatory bodies collaborate to promote the growth of renewable energy industries in China, in line with the country's goals and plans. They contribute to the formulation of national strategies, development plans and standards, while ensuring environmental sustainability and resource efficiency.

1.4 What role do regional or local government or public bodies play in the renewables industry?

Regional and local governments, along with public bodies, have crucial roles in China's renewables industry. They actively contribute to:

• policy implementation;
• project development;
• financial support;
• market development;
• research and innovation; and
• monitoring and enforcement at the regional and local levels.

These governments are responsible for implementing national policies and plans related to renewable energy within their jurisdictions. They develop and enforce regulations, guidelines and incentives to support the deployment of renewable energy technologies.

Moreover, regional and local governments actively promote the development of renewable energy projects. They:

• identify suitable sites;
• facilitate land acquisition and permitting processes; and
• conduct environmental impact assessments.

Financial support is another key aspect where regional and local governments play a role. They provide subsidies, grants, tax incentives and low-interest loans to attract private investment and accelerate the growth of renewable energy projects.

To create favourable market conditions, these governments collaborate with local utilities and grid operators to establish mechanisms such as:

• feed-in tariffs;
• renewable energy quotas; and
• power purchase agreements.

Furthermore, regional and local governments support research and development activities in the renewables sector. They collaborate with academic institutions, research organisations and industry associations to foster innovation and advance renewable energy technologies.

Lastly, local authorities monitor and enforce compliance with environmental regulations and standards for renewable energy projects. They ensure adherence to:

• sustainability practices;
• environmental impact mitigation measures; and
• safety requirements.

2 Renewables industry

2.1 Which renewable technologies are considered relatively mature in your jurisdiction, and which are emerging as potentially new technologies in the market?

China's renewable energy landscape encompasses both mature and emerging technologies. Well-established technologies such as wind power and solar photovoltaic (PV) have experienced significant growth and are widely adopted sources of clean energy. China has made substantial progress in onshore and offshore wind farms, as well as large-scale solar PV installations, benefiting from:

• economies of scale;
• cost reductions; and
• technological advancements.

Hydropower is another mature renewable technology in China, contributing significantly to the country's renewable energy generation capacity. China has a long history of developing hydropower projects, including large-scale dams and run-of-the-river installations.

China is also focusing on emerging technologies to diversify its renewable energy mix. Offshore wind power is a key area of exploration, with abundant wind resources along the coastlines. The offshore wind industry in China is experiencing rapid growth, supported by substantial investments.

Furthermore, China is actively investing in the development of other emerging technologies such as:

• biomass energy;
• geothermal energy;
• tidal energy;
• hydrogen energy; and
• advanced energy storage systems.

These technologies are in the early stages of deployment but hold promise for future renewable energy generation.

China's commitment to research and development is evident in its efforts to advance technologies such as hydrogen energy and advanced energy storage systems, which have the potential to revolutionise the energy sector.

By leveraging both mature and emerging renewable technologies, China aims to:

• expand its renewable energy capacity;
• reduce reliance on fossil fuels; and
• achieve its sustainability goals.

These investments contribute to China's transition towards a low-carbon and sustainable economy.

2.2 Who are the key players in the renewables industry in your jurisdiction?

In China, the renewables industry is propelled by various key players which contribute to its growth and development, including the following:

• State-owned power companies such as State Grid Corporation of China and China Three Gorges Corporation make significant investments in renewable energy projects and contribute to the development and operation of large-scale renewable energy assets.
• Renewable energy developers and operators such as China Energy Investment Corporation, China Huaneng Group and China Datang Corporation play a crucial role in the development, construction and operation of wind farms, solar power plants and other renewable energy projects.
• China's solar PV manufacturing sector is dominated by companies such as JinkoSolar, JA Solar, Trina Solar and LONGi Solar. These companies produce a significant portion of global solar panels and supply both domestic and international markets.
• Goldwind, Envision Group and Mingyang Smart Energy are prominent wind turbine manufacturers in China, contributing to the rapid growth of wind power in the country.
• Financial institutions – including the China Development Bank and Industrial and Commercial Bank of China – provide crucial funding and financial support to renewable energy projects, facilitating their expansion.
• Research institutions and universities such as the Chinese Academy of Sciences and Tsinghua University are instrumental in renewable energy research, development and innovation.

These key players, along with others in the supply chain and supporting industries, collaborate to drive the growth of the renewables industry in China and contribute to the country's ambitious clean energy goals.

2.3 How much do renewables currently contribute to the domestic energy mix? What are the near-term projections for the role they will play?

Renewable energy sources have seen remarkable growth in China, making an increasingly significant contribution to the country's domestic energy mix. In 2022, renewables accounted for 76.2% of the newly added power capacity and comprised 47.3% of the total installed power capacity nationwide.

The first quarter of 2023 witnessed a strong start for renewable energy development in China. The newly added 47.4 gigawatts (GW) of new renewable energy capacity represented an 86.5% increase compared to the previous year and accounted for 80.3% of the newly installed capacity. By the end of the first quarter, China's cumulative renewable energy installed capacity reached 1.258 billion kilowatts (kW). This included:

• 368 million kW of conventional hydroelectric power;
• 46.99 million kW of pumped storage hydropower;
• 376 million kW of wind power;
• 425 million kW of PV power; and
• 41.95 million kW of biomass power.

Electricity generation from renewable sources also experienced continuous growth. In the first quarter of 2023, renewable energy generated a total of 594.7 billion kilowatt-hours (kWh) of electricity, reflecting an 11.4% increase compared to the same period last year. Notably, wind and solar power generation contributed 342.2 billion kWh, demonstrating a significant growth rate of 27.8%.

Looking ahead, China is well positioned to achieve ambitious targets for wind and solar installations. China published two lists of gigantic wind and solar clean energy bases in November 2021 and February 2022. It is projected that China will achieve a combined wind and solar capacity of more than 1100 GW by 2025, which is expected to increase further to over 1200 GW by 2026.

3 Utility-scale renewables projects

3.1 What utility-scale renewables projects are currently operational or planned in your jurisdiction? What are their key features?

China is committed to expanding its renewable energy infrastructure. Some of the key utility-scale renewables projects include the following:

• The Three Gorges Dam, situated on the Yangtze River, is one of the largest hydroelectric power projects globally, with a total installed capacity of 22.5 gigawatts (GW).
• The Longyangxia Dam Solar Park, situated in Qinghai Province, is one of the largest solar parks in the world. It has an 850-megawatt (MW) capacity and works in conjunction with the hydroelectric power station located at the same site.
• The Gansu Wind Farm, situated in Gansu Province, is a 300 MW onshore wind power project. Annually, it generates 670870 megawatt-hours of electricity, offsetting approximately 623,000 tonnes of carbon dioxide emissions.
• The Zhangbei Demonstration Project, situated in Hebei Province, is a wind and solar energy storage and transmission system. By combining wind power, solar PV and energy storage technologies, it enhances grid stability and ensures a reliable power supply.
• The Shenzhen East Waste-to-Energy Plant converts municipal solid waste into electricity. With a capacity of 165 MW, it processes around 5,600 tons of waste per day, supporting a circular economy approach.
• The Jiuquan Wind Power Base, located in Gansu Province, is one of the world's largest wind power installations, with over 7,000 turbines. With an installed capacity exceeding 20 GW, it consists of numerous wind farms spread across a vast area.

3.2 What authorisations are required for the construction and operation of utility-scale renewables projects in your jurisdiction?

The construction and operation of utility-scale renewables projects in China require several authorisations and permits. The key authorisations include the following:

• Feasibility study and planning approval: Prior to the construction of a utility-scale renewables project, developers must:
• • conduct a feasibility study to assess the project's technical, economic and environmental viability; and
  • obtain planning approval from the relevant authorities for permission for land use.
• Environmental impact assessment (EIA): Developers must conduct an EIA to evaluate and mitigate the potential environmental impacts of the project. The EIA report must be submitted to the environmental protection department for review and approval.
• Grid connection: To connect the renewable energy project to the power grid, developers must secure grid connection approval from the grid operator or power distribution entity. This involves ensuring technical compatibility, grid stability and compliance with grid codes.
• Construction permit: Developers must obtain a construction permit from the local government authorities. This permit verifies that the project complies with relevant construction regulations, safety standards and design requirements.
• Operation permit: After the construction is completed, developers must apply for an operating permit from the relevant regulatory authority. This permit certifies that the project meets operational and safety standards and is eligible to generate and supply electricity.

The specific requirements and procedures for obtaining these authorisations may vary depending on the project location, scale and technology. Additionally, utility-scale renewables projects may also require a power purchase agreement.

3.3 Do these authorisations vary in respect of the location of the energy source, the location of the asset or the involvement of a foreign entity?

The authorisations for utility-scale renewables projects in China can vary based on:

• the location of the energy source;
• the location of the asset; and
• the involvement of foreign entities.

The key variations may include the following:

• Energy source: Different types of renewable energy sources – such as wind, solar or hydro – may have specific regulations and requirements.
• Asset location: The location of the asset can also impact on the authorisations required. Different regions or provinces in China may have their own specific regulations and procedures for approving and permitting utility-scale renewable projects.
• Foreign investment: If a foreign entity is involved in the development or operation of a utility-scale renewables project in China, additional considerations and requirements may apply. Foreign entities may need to comply with specific regulations on:
• • foreign investment;
  • IP protection;
  • technology transfer; and
  • partnership with domestic companies.

China actively encourages foreign investment in the renewable energy sector. There are no special limitations for foreign investors and numerous sectors – including new energy power stations, regional energy supply projects, biogas projects and the manufacture of renewable energy equipment – are specifically encouraged. China's commitment to attracting foreign investment, especially in commercial and industrial renewable applications, highlights its dedication to international collaboration.

3.4 What is the procedure for obtaining such authorisations? How long does this typically take? Who is responsible for issuing them?

The procedure for obtaining authorisations for utility-scale renewables projects in China typically involves the following steps:

• Feasibility study and site selection: The project developer conducts a feasibility study to assess the technical and economic viability of the project. This includes:
• • site selection;
  • resource assessment; and
  • environmental impact evaluation.
• Project proposal and approvals: The developer submits a project proposal to the local authorities, providing detailed information about the project, including:
• • design;
  • capacity;
  • EIA; and
  • financial viability.
• The proposal undergoes review and approval by various government departments.
• Permitting and licensing: The developer obtains necessary permits and licences, which may include:
• • land use rights;
  • construction permits; and
  • environmental permits.
• These permits are typically issued by local government agencies responsible for:
• • land and resources;
  • construction; and
  • environmental protection.
• Grid connection: The project developer must secure a grid connection arrangement from the grid operator or power distribution entity. This involves ensuring that the project's generated electricity can be efficiently integrated into the existing grid infrastructure.
• Construction and commissioning: Once the necessary authorisations and permits have been obtained, the developer can proceed with the construction of the project. Upon completion, the project undergoes commissioning and testing to ensure its proper functioning.

The duration of the authorisation process can vary, depending on factors such as:

• project complexity;
• location;
• environmental assessments; and
• administrative efficiency.

It can range from several months to a year or more.

The responsible authorities for issuing the authorisations are primarily at the local level, including the local:

• development and reform commission;
• energy administration;
• environmental protection agency;
• land and resources bureau; and
• construction bureau.

3.5 What are the key features of such authorisations, including any process for renewal and the rights and obligations of the holder?

The key features of authorisations for utility-scale renewables projects in China include the following:

• Duration and renewal: Authorisations are typically granted for a specific duration, which is usually aligned with the project's expected operational lifespan. Upon expiration, the project holder may need to apply for renewal of the authorisation. The renewal process involves a reassessment of project compliance with relevant regulations and standards.
• Rights and obligations: The holder of the authorisation has the right to develop, construct and operate the utility-scale renewables project in accordance with the approved plans and conditions. The holder must comply with the applicable laws, regulations and environmental standards throughout the project's lifecycle.
• Compliance and monitoring: The project holder must ensure ongoing compliance with various regulatory requirements, such as those relating to:
• • environmental protection;
  • health and safety;
  • grid connection; and
  • reporting.
• Regular monitoring and inspections may be conducted by relevant government agencies to assess compliance.
• Reporting and documentation: The project holder may be required to provide periodic reports on the project's progress, operation and performance to the relevant authorities. Documentation related to project design, construction, operation and EIAs must be maintained and made available for inspection upon request.
• Modifications and transfers: Any modifications to the project – such as capacity expansions or changes to project specifications – may require additional authorisation or notification to the relevant authorities. In case of a transfer of project ownership, proper procedures and approvals are necessary to ensure compliance with regulations.
• Termination and revocation: The authorisation may be terminated or revoked if the project holder:
• • fails to comply with the prescribed obligations;
  • breaches environmental regulations; or
  • violates any other relevant provisions.
• Revocation may also occur if the project fails to commence operation within a specified timeframe.

3.6 Can these authorisations be transferred? If so, how and subject to what consents? Do any restrictions apply to the transfer?

In China, the transfer of authorisations for utility-scale renewables projects is subject to certain conditions and consents. Key considerations regarding the transfer of authorisations include the following:

• Transfer process: The transfer of authorisations typically involves a formal application process to the relevant authorities. The project holder must submit a request for transfer, along with the necessary documentation and information about the transferee.
• Consent and approval: The transfer of authorisations requires the consent and approval of the issuing authority responsible for overseeing the renewables projects. The authority will assess the qualifications and capabilities of the proposed transferee to ensure it meets the required criteria.
• Restrictions and conditions: There may be certain restrictions and conditions on the transfer of authorisations. These can vary depending on the specific regulations and policies applicable at the time of the transfer. For example, restrictions may be imposed on:
• • the timeframe within which transfers can occur; or
  • the transferee's financial capacity and technical expertise.
• Compliance and liabilities: The transferee assumes the rights and obligations of the original project holder upon transfer. This includes compliance with applicable laws, regulations and contractual obligations related to the utility-scale renewables project. Any liabilities or obligations arising from the project also transfer to the new holder.
• Notifications and approvals: The transfer process may require notifications to be provided to other relevant stakeholders, such as grid operators, off-takers or financial institutions. Additionally, certain approvals or consents from these stakeholders may be necessary for the transfer to proceed smoothly.

3.7 What obligations apply in relation to decommissioning? How is this funded?

In China, the decommissioning of utility-scale renewables projects follows the obligations stipulated in:

• the project approval and licensing documents; and
• relevant regulations and guidelines.

These obligations encompass the proper dismantling, removal and site restoration of renewable energy infrastructure at the end of its operational life or in case of project termination.

The project owner is responsible for providing the necessary funding for the decommissioning process, which includes equipment removal, site remediation and environmental remediation measures as required. The specific funding mechanisms and requirements may vary depending on the type of renewable energy project and the applicable regulations.

The decommissioning process entails the safe dismantling and removal of equipment, such as turbines, solar panels or other renewable energy infrastructure. Additionally, it involves site restoration activities aimed at returning the land or area to its pre-development condition or an agreed-upon state.

Looking ahead, China is expected to face significant amounts of retired components from renewable energy projects. By 2035, approximately 1.05 million tonnes of retired solar panel components, 1 million tonnes of wind turbines, and 3 million tonnes of electric vehicle batteries may enter the end-of-life waste stream. To address this challenge, the Chinese government has issued a new policy on the recycling of industrial materials. The policy aims to promote the development of technologies for reusing retired solar and wind facilities and improving recycling systems for EV batteries. These measures reflect China's commitment to sustainable waste management and circular economy principles in the renewable energy sector.

3.8 What are the main barriers to the development of utility-scale renewables projects in your jurisdiction?

While China has made significant progress in developing utility-scale renewables projects, several barriers still exist that can hinder their further development. These barriers include:

• limited grid capacity;
• challenges in securing financing;
• complexities in land acquisition and permitting;
• uncertainties in the regulatory framework;
• environmental considerations;
• local opposition; and
• technological and infrastructure challenges.

Integrating large-scale renewable energy projects into the existing grid system can be challenging, particularly in remote areas with limited grid access. Grid connection issues and curtailment of renewable energy generation can impact on project viability. Securing adequate financing for projects is also a challenge, given the high upfront capital costs and perceived risks associated with renewable energy investments.

Obtaining land for renewable energy projects, especially for solar and wind farms, can be complex and time consuming. The coordination required among stakeholders can lead to delays and increased project costs. Changes in subsidy schemes, feed-in tariffs and grid connection policies add uncertainties to the regulatory and policy landscape, affecting project financial viability and investor confidence.

Environmental considerations, such as the impact on wildlife habitats and water resources, must be addressed through compliance with regulations and thorough EIAs. Local communities may resist projects due to concerns about visual impact and potential disruptions to traditional livelihoods, requiring effective community engagement.

The deployment of advanced renewable energy technologies, such as offshore wind and energy storage, faces technological and infrastructure challenges that require investments in research, development and innovation.

3.9 Environmental issues

1. What environmental regulations or requirements must renewables generators in your jurisdiction observe on an ongoing basis (from pre-development to decommissioning)?
2. What are the potential consequences of breach of these requirements – both for the renewables generator and for its directors, managers and employees?
3. Which national and regional regulatory bodies are responsible for the enforcement of environmental obligations, and what is their general approach in regulating the renewables industry?

(a) What environmental regulations or requirements must renewables generators in your jurisdiction observe on an ongoing basis (from pre-development to decommissioning)?

Renewable energy generators in China must adhere to various environmental regulations and requirements throughout their project lifecycle. These measures ensure responsible and sustainable operation. Key regulations include the following:

• EIA: Before development, generators must conduct an EIA to evaluate potential environmental and social impacts. This will propose mitigation measures for areas such as:
• • air quality;
  • water resources;
  • biodiversity;
  • land use; and
  • local communities.
• Water resource management: Projects using water, such as hydropower plants, require permits for water use and must minimise consumption and protect water quality. Compliance with wastewater treatment regulations prevents water pollution.
• Biodiversity conservation: Generators should assess and mitigate project impacts on biodiversity, avoiding disruption to:
• • protected areas;
  • endangered species; and
  • vital habitats.

Compliance ensures project approvals and permits.

• Waste management: Proper waste handling, treatment and disposal are mandatory throughout the project's lifecycle. Generators must adhere to national and local waste management regulations, promoting sustainability and minimising environmental contamination.
• Land reclamation and restoration: After decommissioning, generators are responsible for restoring the project site. They must follow approved plans and guidelines to return the land to its original condition or an agreed-upon post-project state, addressing any contamination.

(b) What are the potential consequences of breach of these requirements – both for the renewables generator and for its directors, managers and employees?

The breach of environmental requirements and regulations by renewables generators in China can have various consequences. Some potential consequences include the following:

• Penalties and fines: Non-compliance with environmental requirements can result in penalties and fines imposed by regulatory authorities. The severity of the penalties depends on the nature and extent of the breach.
• Project delays or suspension: Regulatory authorities may suspend or delay project activities if environmental requirements are not met. This can lead to additional costs, project disruptions and potential financial losses for the generator.
• Legal liabilities: Breach of environmental requirements can expose the generator, directors, managers and employees to legal liabilities. These may include civil lawsuits filed by affected parties or environmental organisations seeking compensation for environmental damages or harm caused by the non-compliant activities.
• Reputational damage: Non-compliance with environmental requirements can harm the reputation of the generator and its key individuals. Negative publicity and public scrutiny can lead to a loss of trust from stakeholders, including investors, customers and the public.
• Regulatory oversight and scrutiny: Repeat or serious breaches may subject the generator to increased regulatory oversight and scrutiny. Authorities may impose stricter monitoring, reporting and compliance obligations, which can add administrative burdens and costs.
• Permit revocation or denial: Regulatory authorities have the power to revoke or deny permits or licences if there is persistent non-compliance with environmental requirements.
• Criminal prosecution: In cases of severe or intentional breaches of environmental requirements, criminal prosecution may be pursued. This can result in criminal charges, fines and even imprisonment for individuals involved in non-compliant activities.

(c) Which national and regional regulatory bodies are responsible for the enforcement of environmental obligations, and what is their general approach in regulating the renewables industry?

In China, the enforcement of environmental obligations for the renewables industry involves multiple national and regional regulatory bodies. The key regulatory bodies responsible for overseeing and enforcing environmental obligations include the following:

• Ministry of Ecology and Environment (MEE): As the central authority, the MEE is responsible for formulating and implementing national environmental policies and regulations. It sets overall standards and guidelines for environmental protection, including those applicable to the renewables industry.
• National Energy Administration (NEA): The NEA focuses on energy-related policies and regulations, including those related to renewable energy. It works in collaboration with the MEE to ensure the integration of environmental considerations into the renewables industry.
• Provincial environmental protection bureaus (EPBs): At the regional level, provincial EPBs are responsible for enforcing environmental regulations within their respective jurisdictions. They:
• • oversee the implementation of national environmental policies;
  • conduct inspections;
  • issue permits; and
  • monitor compliance of renewable energy projects.

In regulating the renewables industry, the general approach of these regulatory bodies is to:

• promote sustainable development;
• minimise environmental impact; and
• ensure compliance with environmental obligations.

They achieve this through a combination of regulations, permits, inspections and monitoring activities.

The approach includes conducting EIAs for renewable energy projects to evaluate potential environmental impacts and propose mitigation measures. These regulatory bodies emphasise the importance of proper waste management, land reclamation and biodiversity conservation throughout the lifecycle of renewable energy projects.

To enhance compliance, regulatory bodies may conduct regular inspections, audits and environmental monitoring of renewable energy projects. Non-compliance can result in penalties, project suspensions or revocation of permits.

3.10 Health and safety issues

1. What key health and safety requirements apply to renewables projects in your jurisdiction and are there best practices in relation to health and safety that should be adopted?
2. What are the potential consequences of breach of these requirements – both for the renewables generator and for its directors, managers and employees?

(a) What key health and safety requirements apply to renewables projects in your jurisdiction and are there best practices in relation to health and safety that should be adopted?

Renewables projects in China must adhere to key health and safety requirements to ensure worker and community wellbeing. These requirements aim to prevent accidents, minimise hazards and create a safe working environment. Key health and safety requirements include the following:

• ensuring compliance with mandatory national and local occupational health and safety laws, which establish:
• • safety requirements;
  • hazard identification processes; and
  • safety management guidelines;
• conducting thorough risk assessments to identify hazards and implement effective risk management measures. This includes assessing:
• • electrical safety;
  • working at heights;
  • machinery operation; and
  • handling of hazardous substances;
• providing safety training to workers involved in renewables projects, covering:
• • hazard awareness;
  • emergency response;
  • personal protective equipment (PPE) usage; and
  • safe work practices;
• implementing well-defined emergency response plans and evacuation procedures, which outline actions for accidents, fires, natural disasters and other emergencies; and providing appropriate safety equipment and communication systems on-site;
• ensuring the safety performance of contractors by:
• • establishing safety guidelines;
  • monitoring compliance; and
  • conducting regular safety inspections;
• adopting best practices in health and safety to enhance worker and community protection, including:
• • promoting a strong safety culture with leadership commitment and employee engagement;
  • conducting regular safety audits and inspections to identify hazards and ensure compliance;
  • providing proper PPE and ensuring its use;
  • encouraging near-miss reporting and learning from incidents;
  • implementing robust safety management systems and continuous improvement processes; and
  • establishing effective communication channels for reporting concerns or incidents.

(b) What are the potential consequences of breach of these requirements – both for the renewables generator and for its directors, managers and employees?

Breach of health and safety requirements in renewables projects in China can have significant consequences for the renewables generator, as well as its directors, managers and employees. These consequences encompass legal, financial and reputational risks.

Non-compliance with health and safety requirements can result in the imposition of legal penalties and fines by regulatory authorities, which vary based on the severity and recurrence of the violation. The renewables generator may face suspension or revocation of permits or licences in case of a serious breach.

Financially, breaches can lead to increased costs associated with:

• rectifying safety deficiencies;
• compensating injured workers; and
• addressing environmental damages.

These expenses can impact on the project's financial viability and harm the overall reputation of the renewables generator.

Breaching health and safety requirements can also damage the image and credibility of the renewables generator, leading to negative publicity, public backlash and a loss of investor confidence. This in turn may hinder future project opportunities, partnerships and access to financing or insurance coverage.

Directors, managers and employees can face personal liability for breaches, including:

• fines;
• legal proceedings;
• potential criminal charges for negligence or misconduct; and
• potential civil claims seeking compensation for damages or injuries caused by the breach.

To mitigate these consequences, renewables generators and their personnel should prioritise health and safety compliance. This involves:

• establishing robust safety management systems;
• providing adequate training and resources; and
• fostering a culture of safety within the organisation.

Regular inspections, prompt resolution of safety concerns and adherence to best practices are essential for maintaining a safe working environment and avoiding legal and reputational risks.

4 Distributed generation projects

4.1 What are the key differences in relation to small-scale distributed generation projects compared to utility-scale projects in your jurisdiction with regard to the regime discussed in question 3?

The key differences between small-scale distributed generation projects and utility-scale projects in China include the following:

• Authorisation process: Small-scale distributed generation projects often have a simplified authorisation process compared to utility-scale projects. They may require less extensive environmental impact assessments and permit applications, resulting in a quicker and less bureaucratic approval process.
• Regulatory oversight: While utility-scale projects are subject to more stringent regulations and oversight from regulatory bodies, small-scale distributed generation projects are typically subject to less regulatory scrutiny. This is due to their smaller size and localised nature.
• Grid connection: Utility-scale projects often require a more complex and extensive grid connection process due to their larger capacity and integration into the existing power grid. Small-scale distributed generation projects, on the other hand, may benefit from simplified grid connection procedures.
• Funding and incentives: Utility-scale projects generally have access to a wider range of funding options and government incentives, given their larger scale and potential for significant energy generation. Small-scale distributed generation projects may have access to different funding programmes and incentives that are specifically designed for decentralised energy production.
• Operational considerations: Utility-scale projects often involve complex project management, construction and operation processes due to their size and capacity. Small-scale distributed generation projects, being smaller in scale, may have simpler operational requirements and maintenance needs.

4.2 What are the main networks that apply to small-scale distributed generation projects in your jurisdiction?

The main networks that apply to small-scale distributed generation projects in China are as follows:

• Electricity distribution networks: Small-scale distributed generation projects are typically connected to the local electricity distribution networks. These networks are responsible for delivering electricity from the generation source to end users or the grid.
• Smart grid networks: The development of smart grid infrastructure is an important aspect of small-scale distributed generation in China. Smart grid networks enable efficient two-way communication between the distributed generation sources and the grid, allowing for real-time monitoring, control and optimisation of electricity flows.
• Virtual power plant (VPP) networks: VPPs are emerging as a concept in China's small-scale distributed generation sector. VPPs aggregate and manage multiple small-scale generation sources, such as residential solar panels or energy storage systems, to operate as a single integrated power plant. These networks enable optimised power dispatch and coordination between the distributed resources.
• Data communication networks: Small-scale distributed generation projects often require data communication networks to transmit real-time generation data, performance metrics and system monitoring information. These networks facilitate remote monitoring, troubleshooting and maintenance of the distributed generation systems.
• Energy management systems: These play a crucial role in coordinating and optimising the operation of small-scale distributed generation projects. They:
• • integrate data from various generation sources;
  • manage electricity flows; and
  • ensure efficient utilisation of the distributed energy resources.

5 Taxes and incentives

5.1 What national, regional and/or local incentives are available as subsidies or support to facilitate the deployment of renewables projects in your jurisdiction?

In China, various national, regional and local incentives are available to support renewable energy projects. These incentives aim to facilitate the deployment of renewables and drive the transition to clean energy. Key incentives include the following:

• Feed-in tariffs (FiTs): The government offers FiTs, providing a fixed price for renewable electricity generation. FiTs ensure revenue stability and attract investment.
• Subsidies: National, regional and local subsidies reduce upfront costs for renewable projects, making them more financially viable. These subsidies help offset capital expenditures and improve project feasibility.
• Tax benefits: Tax incentives and exemptions are provided to renewable projects. These include value-added tax (VAT) waivers, income tax reductions, and preferential tax rates, lowering overall project costs.
• Renewable energy certificates (RECs): China introduced a Green Electricity Certificate (GEC) scheme. GECs represent the environmental attributes of renewable electricity and can be traded independently. Project owners can sell RECs to meet renewable energy targets.
• Grants and funds: Government grants and funds support research and development, technology innovation and project demonstration. These financial resources assist renewable projects, particularly those involving emerging technologies.
• Preferential policies: Local governments may offer additional benefits such as:
• • land-use rights;
  • simplified approval processes; and
  • infrastructure access.
• These policies attract renewable investments and streamline project development.

The availability and details of incentives may vary by location and project type. Developers should consult relevant authorities to understand the specific incentives applicable to their projects.

5.2 Are any tax reliefs available for investment in renewables projects?

China provides various tax incentives to encourage investments in renewable energy projects, including:

• VAT exemptions;
• income tax reductions;
• accelerated depreciation;
• loss carryover; and
• import duty exemptions.

VAT exemptions are granted to manufacturers and suppliers of renewable energy equipment, allowing them to avoid paying VAT on equipment sales and related services. This exemption helps to reduce procurement costs for renewable energy projects.

Renewable energy project developers may be eligible for income tax reductions based on factors such as project size, location and nature. These reductions can take the form of preferential tax rates or breaks, lowering tax liabilities and improving project profitability.

Accelerated depreciation allows renewable energy project owners to recover their investment costs more rapidly and reduce taxable income. This incentive provides financial relief by enabling a quicker return on investment.

Loss carryover provisions enable companies that experience losses during the early stages of renewable energy projects to carry forward those losses and offset future taxable income. This measure provides tax relief during the initial years of the project.

Import duty exemptions are granted for imported renewable energy equipment and components. This exemption helps to reduce import costs and promotes the adoption of renewable energy technologies by eliminating import duties.

These tax incentives aim to remove financial barriers and encourage investments in clean energy. Specific incentives and eligibility criteria may vary based on project type and location. Developers and investors are advised to consult tax authorities or professionals to fully understand and utilise the available tax incentives.

5.3 Have there been any interventions affecting renewables projects in terms of their ability to be constructed or operated, or their ability to earn revenue, in your jurisdiction?

There have been interventions affecting renewables projects in China that have impacted their ability to be constructed or operated, or to earn revenue. These interventions include:

• policy changes;
• subsidy adjustments;
• curtailment measures; and
• grid connection issues.

Notable examples include the following:

• FiT adjustments: China has adjusted its FiT schemes for renewable energy. These adjustments may impact on the revenue potential of renewable energy projects.
• Subsidy reductions: The Chinese government has gradually reduced subsidies for certain renewable energy technologies to encourage market competition and cost optimisation.
• Curtailment measures: 'Curtailment' refers to the reduction or restriction of renewable energy generation due to various reasons, including grid congestion and inadequate transmission capacity. Curtailment has been a challenge in some regions of China for wind and solar projects.

• Grid connection challenges: Connecting renewable energy projects to the power grid can sometimes be a complex process in China. Grid connection delays, limitations and associated costs have posed challenges for project developers.
• Policy and regulatory changes: China has implemented various policy and regulatory changes in the renewable energy sector, such as:
• • adjusting project approval processes;
  • setting new requirements for technology standards; and
  • enhancing environmental and safety regulations.
• These changes can impact the timeline, costs and compliance obligations for renewable projects.

Developers and investors in the renewables sector should closely monitor policy developments and regulatory changes to anticipate potential interventions that may affect project construction, operation and revenue generation.

5.4 What other incentives are available to promote the development of the renewables industry in your jurisdiction?

Other incentives available in China to promote the development of the renewables industry include the following:

• Green certificates: China has implemented a green certificate system to incentivise renewable energy generation. Renewable energy producers can obtain green certificates for the electricity they generate, which can be sold to obligated entities for compliance with renewable energy consumption targets. This creates an additional revenue stream for renewable project owners.
• Competitive bidding programmes: The Chinese government has introduced competitive bidding programmes for certain renewable energy projects, such as solar and wind. Through these programmes, project developers participate in auctions to secure project contracts and tariffs, providing them with long-term revenue certainty and reducing reliance on subsidies.
• Demonstration projects: China has established demonstration projects in various regions to showcase innovative renewable technologies and practices. These projects receive special support – including financial incentives, policy support, and preferential grid access – to encourage the adoption and commercialisation of new renewable energy solutions.
• Green finance initiatives: China has been actively promoting green finance mechanisms to support the development of the renewables industry. This includes establishing green development funds, green bonds and favourable loan terms for renewable energy projects. These initiatives help to attract private investment and provide financing options for project development.
• Carbon market: China has launched a national carbon market, which creates a market-based incentive for reducing greenhouse gas emissions. Renewable energy projects, being low carbon in nature, can generate carbon credits that can be traded in the carbon market, providing an additional revenue stream and enhancing the economic viability of such projects.

6 Financing structures

6.1 Is debt financing typically used and are there any particular structures that are common for renewables projects in your jurisdiction?

Debt financing is commonly used for renewable energy projects in China, providing a significant portion of the required capital. Various financing structures are employed based on project characteristics and investor preferences. Some common structures include the following:

• Commercial bank loans: Project developers often secure loans from commercial banks to finance renewable energy projects, usually in the form of term loans tailored to the specific needs of the project.
• Policy banks and development banks: China's policy banks – such as China Development Bank and Agricultural Development Bank of China – offer favourable loan terms, including low interest rates and extended repayment periods.
• Green bonds: Green bonds are another source of financing for renewable energy projects. The proceeds from green bond issuances are earmarked for renewable energy projects.
• Asset-backed securities (ABSs): ABSs are backed by the cash flows generated by operating renewable energy projects, allowing investors to participate in the revenue streams of the projects.
• Public-private partnerships (PPPs): In certain cases, renewable energy projects in China are developed through PPP structures, involving collaboration between public entities, private investors and project developers, with each party contributing financing and expertise.

The specific financing structures may vary depending on project size, technology and the risk appetite of investors. Additionally, government policies and incentives can influence the availability and terms of debt financing for renewable energy projects.

6.2 What are the advantages and disadvantages of these different types of structures?

The different financing structures for renewable energy projects in China offer various advantages and disadvantages, as follows:

• Commercial bank loans:
• • Advantages: Commercial bank loans provide flexibility and a wide range of financing options tailored to the specific needs of the project. They offer competitive interest rates and terms based on the borrower's creditworthiness.
  • Disadvantages: Securing commercial bank loans can be challenging, especially for smaller projects or those with higher risk profiles. Strict lending criteria and requirements may limit accessibility to financing.
• Policy banks and development banks loans:
• • Advantages: Policy banks and development offer favourable loan terms, including lower interest rates and extended repayment periods. They are more inclined to support renewable energy projects aligned with government priorities.
  • Disadvantages: Access to policy bank and development bank loans may require strong government connections and compliance with specific criteria. These loans may have stricter project evaluation and approval processes.
• Green bonds:
• • Advantages: These attract socially and environmentally conscious investors seeking to support sustainable projects. They provide a dedicated funding source for renewable energy projects and contribute to broader climate finance objectives.
  • Disadvantages: Green bond issuances require compliance with specific standards and reporting requirements, increasing administrative costs. Smaller projects may face challenges in accessing the green bond market due to the scale and complexity of the issuance process.
• ABSs:
• • Advantages: These structures allow project owners to monetise the cash flows from operating projects, providing liquidity and the ability to invest in new ventures. ABSs can attract a broader investor base and diversify risk.
  • Disadvantages: Developing and structuring ABSs can be complex and costly, requiring legal expertise and thorough due diligence. ABSs are subject to market conditions and investor demand, which can impact their availability and pricing.
• PPPs:
• • Advantages: These leverage the expertise and resources of both public and private sectors, sharing risks and responsibilities. They can access public funding and benefit from streamlined project approval processes.
  • Disadvantages: PPPs involve complex negotiations, coordination and risk allocation between public and private entities. The decision-making process may be slower due to multiple stakeholders' involvement.

6.3 What other considerations and concerns should parties bear in mind when deciding on a financing structure for a renewables project?

When deciding on a financing structure for a renewable project, there are several other considerations and concerns that parties should bear in mind. These include the following:

• Risk profile: Different financing structures may have varying levels of risk allocation between the project sponsor and the lender. It is important to align the risk appetite of the parties involved and ensure that the chosen structure effectively manages and mitigates risks.
• Cost of capital: Interest rates, fees and other expenses can significantly affect the overall project economics. Comparing the cost of capital across different structures can help to determine the most cost-effective option.
• Project duration: Short-term projects may benefit from a different structure compared to long-term projects. Matching the financing terms with the project's expected timeline can optimise the financial arrangements.
• Regulatory environment: Different financing structures may align better with specific regulatory requirements or be more compatible with available incentives, such as tax benefits or subsidies.
• Investor preferences: Some investors may have specific criteria or preferences regarding financing structures. Understanding these preferences can help to attract suitable investors and secure financing more effectively.
• Flexibility and scalability: Projects that may require future expansions or refinancing should consider structures that allow for such flexibility without significant constraints.

By carefully considering these factors and conducting thorough financial analysis, parties can make informed decisions when selecting a financing structure that aligns with their project's needs and objectives.

6.4 What main financing institutions are active in your jurisdiction?

In China, there are several main financing institutions that are active in providing funding for renewable projects. These institutions include the following:

• China Development Bank (CDB): As one of the major policy banks in China, CDB plays a significant role in financing renewable energy projects. It offers long-term, low-cost financing to support the development and deployment of renewables across the country.
• Industrial and Commercial Bank of China (ICBC): ICBC is one of the largest commercial banks in China and is actively involved in financing renewables projects. It provides loans and other forms of credit support for renewable energy initiatives.
• Agricultural Bank of China (ABC): ABC is another major commercial bank in China that participates in financing renewables projects. It offers various financial products and services tailored to the specific needs of the renewable energy sectors.

• Bank of China (BOC): BOC is one of the four largest state-owned commercial banks in China and is actively engaged in financing renewables projects. It provides loans and other financial services to support the development and operation of renewable energy projects.
• China Construction Bank (CCB): CCB is another prominent commercial bank in China that provides financing for renewables projects. It offers a range of financial products and services, and other forms of credit support for renewable energy initiatives.
• China Exim Bank: China Exim Bank specialises in providing financing and credit support for international trade and overseas investment. It plays a role in supporting Chinese companies' participation in renewable energy projects abroad.

6.5 Which financing markets are usually turned to for sources of debt in your jurisdiction, (eg, local, London, New York)?

In China, the financing markets primarily relied upon for sources of debt in renewables projects are the local domestic market and, to some extent, international markets such as Hong Kong. While there may be instances where international markets such as London and New York are accessed, the majority of debt financing for renewables projects in China is obtained from domestic sources.

The domestic financing market in China is well developed and offers a range of options for debt financing, including bank loans, bonds and other debt instruments. Chinese banks – both policy banks and commercial banks – are major providers of debt financing for renewables projects. They have experience in funding such projects and have a strong understanding of the local market dynamics and regulatory environment.

In recent years, China has also encouraged the development of green finance and the issuance of green bonds. This has further facilitated access to debt financing for renewable energy projects, as investors are increasingly interested in supporting sustainable and environmentally friendly initiatives.

While international markets such as London and New York can provide additional sources of debt financing, they are typically not the primary markets for renewables projects in China. However, in cases where project developers seek to attract international investors or access specific financial instruments available in those markets, they may consider tapping into these international sources of debt.

Overall, the domestic financing market in China remains the main source of debt financing for renewables projects, given:

• the availability of local financial institutions;
• government support; and
• the size of the domestic market.

7 Transmission, distribution and export

7.1 What are the applicable processes for connecting renewables projects with transmission, distribution and export networks in your jurisdiction? Do these processes differ between different types of renewable technologies and between renewables and non-renewable projects?

The processes for connecting renewable projects to transmission, distribution and export networks may differ from non-renewable projects due to the unique characteristics and intermittent nature of renewable energy sources. The grid impact assessment and connection requirements may consider factors such as:

• the variability of renewable generation;
• power quality issues; and
• grid stability considerations.

The specific processes may vary depending on the type of renewable technology and the project's scale, but there are general steps involved in the connection process:

• Feasibility study: The project developer conducts a feasibility study to assess the technical and economic viability of the project and its connection to the grid, including evaluating grid capacity, infrastructure requirements and potential impacts on the network.
• Grid access application: The project developer submits a grid connection application to the relevant grid company, providing project details and requesting connection to the transmission or distribution network.
• Grid impact assessment: The grid company conducts a grid impact assessment to evaluate the project's impact on the grid's stability, capacity and overall operation. This assessment helps to determine the grid connection requirements and any necessary modifications.
• Connection agreement: If the grid impact assessment is favourable, a connection agreement is negotiated between the project developer and the grid company. The agreement outlines the technical requirements, connection costs and timelines.
• Construction phase: The necessary construction and installation of grid connection facilities – such as transformers, switchgear and power lines – will need to be completed as per the connection agreement.
• Testing and commissioning: Once the construction is completed, testing and commissioning activities are conducted to ensure the proper functioning and compatibility of the renewable project with the grid network.

7.2 What requirements and restrictions apply to the export of renewable energy onto the network?

In China, the export of renewable energy onto the network is subject to certain requirements and restrictions. These requirements and restrictions aim to ensure the stability and reliability of the grid while promoting the integration of renewable energy sources. The specific requirements and restrictions can vary depending on the region and the renewable technology involved. Common considerations include the following:

• Grid capacity and stability: The grid's capacity and stability play a crucial role in determining the amount of renewable energy that can be exported. Grid companies assess the available capacity and consider factors such as voltage regulation, power quality and grid stability to ensure that the export does not jeopardise the overall reliability of the grid.
• Grid code compliance: Renewable energy projects seeking to export energy must comply with the grid code, which outlines technical standards, operational requirements and safety regulations. This ensures that the exported energy meets the necessary quality and safety standards.
• Connection agreement: An agreement between the project developer and the grid company is established to specify the terms and conditions of energy export. This agreement includes details such as:
• • the maximum export capacity;
  • the connection point;
  • operational protocols; and
  • any associated fees or charges.
• Dispatch and curtailment: Grid companies have the authority to manage the dispatch and curtailment of renewable energy generation based on grid conditions and system stability. This means that in certain situations, renewable energy exports may be curtailed or adjusted to maintain grid reliability.
• Regulatory approvals: Projects intending to export renewable energy may need to obtain regulatory approvals and permits from relevant energy regulatory authorities. These approvals ensure compliance with national energy policies and regulations.

7.3 What other considerations and concerns should be borne in mind in relation to the transmission, distribution and export of renewable energy in your jurisdiction, including participation in ancillary services, wholesale electricity trading markets, network charging arrangements specific to renewables and the ability to construct part of the connection infrastructure? Are there long queues and delays for connection?

In addition to the processes for transmission, distribution and export of renewable energy in China, there are several other considerations and concerns to bear in mind:

• Participation in ancillary services: Renewable energy projects can participate in ancillary services, which are essential for maintaining grid stability. These services include:
• • frequency regulation;
  • voltage control; and
  • reactive power support.
• Participation in ancillary services may require additional technical capabilities and compliance with specific requirements set by the grid operator.
• Wholesale electricity trading markets: Renewable energy generators can participate in wholesale electricity trading markets to sell their excess energy. These markets facilitate the trading of electricity between generators, retailers and other market participants. However, access to wholesale electricity trading markets may involve compliance with market rules and regulations, as well as obtaining relevant trading licences.
• Network charging arrangements: Renewable energy projects may be subject to network charging arrangements that govern the costs associated with connection, use of the grid and other network services. These arrangements can impact on the economics of renewable projects, and it is important to understand the specific charging mechanisms and cost allocation methods employed by the grid operator.
• Connection infrastructure construction: In certain cases, renewable energy projects may need to construct part of the connection infrastructure to link their generation to the grid. These include building substations, transmission lines and other necessary infrastructure components. The responsibility for construction, costs and compliance with technical standards should be considered during project planning.
• Queues and delays: Depending on the region and the demand for grid connection, there may be queues and delays in obtaining grid access for renewable energy projects. The availability of connection capacity and the queue management process can vary across different areas. Understanding the local grid situation and engaging in early discussions with the grid operator can help to mitigate potential delays.

7.4 Are there any initiatives, reforms or consultations relating to the connection of renewables projects?

China has undertaken various initiatives, reforms and consultations to streamline and improve the connection of renewable energy projects to the grid. Some notable efforts include the following:

• Renewable energy development plans: The Chinese government has formulated national and regional renewable energy development plans to guide the deployment of renewables. These plans outline targets, policies and measures to support the integration of renewable energy into the grid, including the enhancement of connection processes.
• Grid planning and expansion: The Chinese government has been actively planning and expanding the transmission and distribution infrastructure to accommodate the growing capacity of renewable energy. This includes:
• • developing new transmission lines;
  • upgrading existing infrastructure; and
  • establishing priority zones for renewable energy development.
• Grid access reforms: China has implemented reforms to simplify and expedite the grid access process for renewable energy projects. These reforms aim to:
• • reduce administrative burdens;
  • enhance transparency; and
  • promote fair competition.
• They include measures to:
• • streamline project approvals;
  • improve grid planning; and
  • establish clear guidelines for connection procedures.
• Consultations and stakeholder engagement: The government and grid operators regularly engage in consultations and dialogue with industry stakeholders, including renewable energy developers, industry associations and research institutes. These consultations provide opportunities for:
• • feedback;
  • discussions on policy improvements; and
  • the resolution of issues related to grid connection.
• Technology integration and smart grid development: China is actively promoting the integration of renewable energy with smart grid technologies. Smart grid advancements enable better monitoring, control and coordination of renewable generation, improving grid stability and accommodating higher shares of renewable energy.

8 Storage

8.1 What processes and rules apply to parties wishing to construct and operate a storage (eg, battery, hydrogen, hydro) project in your jurisdiction?

The specific processes and rules for constructing and operating storage projects in China may vary depending on the type of storage technology, but some general considerations include the following:

• Project development and approval: Parties must follow the established procedures for project development and approval, which may involve obtaining permits, licences and environmental assessments from relevant authorities. The process typically includes:
• • feasibility studies;
  • project design; and
  • submission of necessary documentation.
• Grid connection: Similar to renewable energy projects, storage projects must go through the grid connection process. This involves:
• • obtaining grid connection approvals;
  • negotiating interconnection agreements; and
  • ensuring compliance with technical standards and regulations.

Grid operators may have specific requirements for the integration of storage projects into the grid.

• Permitting and compliance: Storage projects may require specific permits or registrations, depending on the technology and capacity. Parties must adhere to relevant regulations and standards governing:
• • storage operations;
  • safety; and
  • environmental protection.
• Compliance with fire safety codes, environmental impact assessments and other regulatory requirements is essential.
• Market participation and revenue mechanisms: Storage projects may participate in electricity markets and benefit from revenue mechanisms such as:
• • capacity payments;
  • energy arbitrage;
  • ancillary services; or
  • other market-based incentives.
• Technology-specific regulations: Different storage technologies may have specific regulations and standards. For example:
• • battery storage projects need to comply with safety standards for battery systems and storage management; and
  • hydrogen storage projects may need to adhere to regulations on hydrogen production, storage and transportation.

8.2 Are there any barriers to the development of storage projects in your jurisdiction?

There are several barriers to the development of storage projects in China, including the following:

• Regulatory framework: The regulatory framework for storage projects is still evolving in China. The specific rules and regulations governing storage projects may not be well defined or comprehensive, which can create uncertainty for developers and investors.
• Market design: The existing market design and mechanisms in China's electricity market may not adequately value the services and benefits provided by storage projects. This can impact the economic viability and attractiveness of storage investments.
• Grid integration: Storage projects face challenges in terms of grid integration and connection. Grid infrastructure may need to be upgraded or modified to accommodate the unique characteristics and requirements of storage technologies.
• Financing and investment: The relatively high upfront costs of storage projects can pose challenges in securing financing and attracting investment. Lack of financial incentives and support mechanisms specifically tailored for storage projects may also limit their development.
• Permitting and approvals: The permitting and approval processes for storage projects may involve complex procedures and lengthy timelines. Developers must navigate through multiple regulatory agencies and obtain various permits, which can result in delays and increased costs. Land availability, zoning restrictions and environmental considerations can also pose barriers to project development.
• Lack of awareness and experience: The storage industry is still relatively new in China and there may be a lack of awareness and understanding among policymakers, regulators and stakeholders about the benefits and potential of storage projects. This can hinder the development and deployment of storage technologies.

8.3 What other considerations and concerns should be borne in mind in relation to the development of storage projects in your jurisdiction?

In addition to the barriers mentioned earlier, several other considerations and concerns should be borne in mind:

• Technology selection: Choosing the appropriate storage technology is crucial, considering factors such as:
• • capacity;
  • duration; and
  • cycling needs.
• Options include batteries, hydrogen and pumped hydro, each with unique characteristics and costs.
• Grid interconnection: Seamless integration with the grid is essential. Compliance with grid codes, technical requirements and safety standards is necessary for smooth interconnection and operation. Collaboration with grid operators and utilities is vital for addressing technical challenges.
• Project siting: Identifying suitable locations is important, considering proximity to:
• • renewable energy sources;
  • grid infrastructure; and
  • demand centres.
• Compliance with environmental and land use regulations, including permits and approvals, is crucial.
• Operation and maintenance: Establishing a robust operation and maintenance plan ensures long-term performance and efficiency. Regular monitoring, maintenance and optimisation are necessary for reliable and safe operation.
• Safety and environmental considerations: Compliance with safety protocols, fire protection measures and environmental regulations minimises risks and ensures sustainability.
• Market and revenue streams: Identifying revenue opportunities, such as energy market participation and ancillary services, is essential for economic viability. Accessing incentive programmes and subsidy schemes specific to storage technologies can be advantageous.
• Financing and investment: A solid business case should be developed, evaluating financial risks and exploring funding options – including public-private partnerships and green finance initiatives – to attract investment for storage projects.
• Stakeholder engagement: Engaging with local communities, utilities and regulatory agencies fosters acceptance and addresses concerns throughout the project lifecycle.

9 Competition

9.1 Are there any dominant players, including dominant purchasers, in the renewables industry in your jurisdiction?

In the renewables industry in China, there are several dominant players, including both major renewable energy companies and dominant purchasers:

• China Three Gorges Corporation (CTG): CTG is one of the largest renewable energy companies in China. It specialises in hydropower generation and operates several major hydropower projects in the country.
• China Energy Investment Corporation: China Energy is one of the largest state-owned energy companies in China. It has a diverse portfolio that includes coal, wind, solar and other renewable energy projects.
• State Power Investment Corporation (SPIC): SPIC is another prominent state-owned energy company in China, involved in both conventional and renewable energy sectors. It has a significant presence in wind and solar power projects.
• China Huaneng Group: Huaneng Group is one of China's largest power generation companies, involved in various energy sources, including coal, wind, solar and hydropower. It has a substantial renewable energy portfolio.
• State Grid Corporation of China (SGCC): SGCC is the largest power utility company in the world and plays a crucial role in the transmission and distribution of electricity in China. It operates the majority of the country's power grid infrastructure and has a significant influence on the renewables sector.
• China Southern Power Grid (CSG): CSG is another major grid operator in China, responsible for power transmission and distribution. It plays a crucial role in connecting renewable energy projects to the grid and facilitating their integration.

9.2 Are there any pro-competition measures that are targeted specifically at renewables generators?

In China, there are pro-competition measures that are targeted specifically at renewables generators. One notable measure is the Renewable Portfolio Standard (RPS) system. The RPS is a policy mechanism that requires electricity suppliers to source a certain percentage of their electricity from renewable energy sources. This creates a competitive market for renewable energy generators, as electricity suppliers need to meet their RPS obligations by purchasing renewable energy credits or directly procuring renewable energy from generators.

The RPS system promotes competition among renewables generators by providing them with a guaranteed market and creating a demand for renewable energy. It encourages the development of a diverse and competitive renewable energy sector, as generators compete to supply electricity to meet the RPS requirements. This mechanism stimulates investment in renewables projects and creates opportunities for both large-scale and small-scale generators to participate in the market.

Additionally, China has implemented competitive bidding processes for certain renewable energy projects, such as solar and wind power projects. These competitive tenders allow multiple developers to submit bids for project development and ensure a transparent and competitive selection process. By promoting competition in project development, these bidding processes help to drive down costs and improve efficiency in the renewables sector.

Furthermore, market reforms and deregulation efforts in China's electricity sector aim to enhance competition and create a level playing field for renewable energy generators. These reforms include measures to:

• facilitate open access to the grid;
• promote fair market pricing; and
• encourage market-based mechanisms for trading renewable energy.

Overall, these pro-competition measures encourage a competitive environment for renewables generators in China, fostering innovation, efficiency and cost reduction in the sector.

10 Disputes

10.1 In your jurisdiction, do disputes typically go to arbitration or litigation, and does this vary for different types of disputes? What sorts of matters tend to come up in disputes?

In China, the resolution of disputes in the renewables industry can involve both arbitration and litigation, depending on:

• the nature of the dispute; and
• the agreements between the parties involved.

The choice between arbitration and litigation can vary for different types of disputes.

Generally, arbitration is commonly preferred for commercial disputes; while litigation is often utilised for matters involving environmental protection and carbon reduction policies. Arbitration offers a private, confidential and flexible process, and is favoured for disputes arising from contractual agreements, investments and other business-related matters. On the other hand, litigation and judicial proceedings are frequently utilised for disputes related to:

• environmental regulations;
• carbon emission quotas;
• national policies and regulations pertinent to renewables; and
• the implementation of green and low-carbon industrial transformations.

Disputes in the renewables industry can involve various matters, including:

• contract interpretation;
• payment disputes;
• project delays;
• performance issues;
• IP infringements; and
• regulatory compliance.

Disputes may arise between:

• project developers;
• equipment suppliers;
• construction contractors;
• off-takers; and
• other parties involved in renewable energy projects.

Additionally, disputes can involve issues related to government policies, incentives and regulatory frameworks governing the renewables industry. These matters may require legal interpretation, administrative review or challenges to regulatory decisions.

Alternative dispute resolution methods, such as negotiation and mediation, are also utilised in the renewables industry in China – particularly in attempts to reach amicable resolutions before resorting to formal arbitration or litigation. These methods can help parties to find mutually acceptable solutions and potentially avoid lengthy and costly legal proceedings.

10.2 Have there been any important disputes in the public domain that relate to or may potentially impact on the renewables industry or the deployment of renewables projects?

One key area of dispute involves cases related to the development of renewable energy and the assessment of environmental impacts. These cases are handled according to the classification guidance policies for energy project construction land and requirements for land and spatial planning. The aim is to strike a balance between:

• the ecological protection of deserts, Gobi regions and wastelands; and
• the demand for construction land for large-scale wind and solar power bases.

Disputes relating to the integration and operation of renewable energy generation by grid companies are also being addressed. The objective is to promote efficient and clean energy utilisation in accordance with the law.

Additionally, some disputes involve the trading of carbon emissions quotas and voluntary offset credits. The courts will assess the validity of transaction contracts and ensure compliance with:

• regulations;
• administrative rules; and
• market business rules.

The aim is to determine the ownership of carbon trading products and to hold relevant parties accountable for civil liabilities based on legal provisions and risk prevention systems. The courts also rigorously evaluate the validity of related guarantee contracts, considering the nature of the assets involved.

Furthermore, disputes may arise in relation to greenhouse gas emission reporting. Non-compliance with reporting obligations or the falsification, fabrication, concealment or omission of emission data can lead to administrative penalties. If technical service institutions collude with emitters and cause harm through false reporting, affected parties have the right to claim compensation, and criminal liability may be pursued.

11 Trends and predictions

11.1 How would you describe the current renewables landscape and prevailing trends in your jurisdiction?

China is making significant strides in its renewable energy sector, with a strong focus on wind and solar power capacity expansion. The current five-year plan is fast-tracking the development of wind and solar projects, positioning China to potentially achieve its 2030 renewable energy targets ahead of schedule.

China has already established itself as a global leader in renewable energy, boasting an installed capacity of more than 1 billion kilowatts, which accounts for 47.3% of the country's overall installed capacity.

China is actively developing large-scale wind and solar power stations in barren terrains, rocky areas and deserts. China is also promoting offshore wind farms, rooftop photovoltaic power generation and distributed wind power generation in rural areas. In addition, China has built an extensive network of large hydropower stations, particularly in the major river basins; while also exploring other sources such as solar, biomass, geothermal, ocean energy, and urban solid waste incineration for power generation. Furthermore, China is driving innovation in hydrogen energy development.

In terms of clean energy consumption, China has been successful in increasing the proportion of renewable energy sources in its total energy consumption. The share of clean energy sources has risen to 25.9%. In contrast, the proportion of coal in the energy mix has decreased to 56.2%.

Overall, China's renewables landscape is marked by impressive growth, ambitious targets and a diverse mix of renewable energy sources. With a focus on wind and solar power, along with efforts in other renewable sectors and clean energy consumption, China is solidifying its position as a global leader in renewable energy transition.

11.2 What influence are net zero commitments having on the development of the renewables industry in your jurisdiction?

The net-zero commitments are having a significant influence on the development of the renewables industry in China. China already has the largest solar and wind power generating capacities in the world, accounting for over 35% of the global total. As the country strives to meet its climate goals, the demand for renewable energy continues to grow. This increased demand is driving the need for storage facilities to ensure a reliable and consistent supply of renewable energy.

According to climate analysts, China is expected to achieve its 2030 target of installing renewable energy capacity ahead of schedule, possibly by about five years. More than 30 provinces in China have unveiled their respective programmes under the national five-year plan, committing to install over 300 gigawatts (GW) of wind power and 550GW of solar power. This would exceed Beijing's original target of 1200 GW by 2030, with a combined capacity for both sources reaching 1500 GW by the end of the plan period.

China has also emphasised the need to integrate carbon reduction, pollution reduction, ecological conservation and economic growth. The national guidelines released in support of the transition to a low-carbon economy highlight the importance of improving the quality of the ecological environment and adopting a green and low-carbon development approach. This includes tasks such as:

• enhancing water resource conservation and utilisation;
• improving the functionality of ecosystems and carbon sinks;
• continually improving environmental quality;
• promoting green and low-carbon lifestyles; and
• establishing institutional mechanisms for green and low-carbon development.

These commitments and guidelines reflect the adoption of green development principles and the focus on achieving continuous improvement in the quality of the ecological environment. The net-zero commitments are driving the renewable industry in China to expand its capacity and accelerate the transition towards a greener and more sustainable future.

11.3 What new developments are anticipated in the next 12 months, including any proposed legislative reforms?

In the next 12 months, China is expected to witness significant developments and proposed legislative reforms in the renewable energy sector. Anticipated new developments include the following:

• Renewable energy expansion: China aims to accelerate the deployment of renewable energy sources, particularly wind and solar power. The government plans to increase the installed capacity of renewable energy and promote the construction of large-scale wind and solar projects.
• Offshore wind power: China aims to enhance offshore wind capacity and improve the efficiency and cost-effectiveness of offshore wind turbines. This sector is anticipated to experience significant growth and attract investments in the coming year.
• Energy storage: China recognises the importance of energy storage technologies in supporting renewable energy integration and grid stability. Legislative reforms may be proposed to facilitate the adoption of energy storage solutions and incentivise investment in this sector.
• Carbon market expansion: China has launched a national carbon emissions trading market and plans to expand its coverage. In the coming year, more industries and regions are likely to be included in the carbon market, increasing the trading volume and facilitating emissions reduction. Proposed legislative reforms may focus on refining regulations and strengthening the market's role in promoting carbon pricing and emission reductions.
• Green finance initiatives: China is actively promoting green finance to support renewable energy projects. Proposed legislative reforms may include measures to encourage financial institutions to provide more favourable terms for renewable energy financing and to establish green investment funds. This would facilitate the flow of capital into the renewables sector and contribute to its growth.

12 Tips and traps

12.1 What are your top tips for renewables generators in your jurisdiction and what potential sticking points would you highlight?

For renewables generators in China, top tips to navigate the sector effectively include the following:

• Stay updated on the latest renewable energy policies, regulations and incentives in China. Regularly monitor announcements from government agencies to ensure compliance and take advantage of available support mechanisms.
• Understand the grid connection process and requirements for renewables projects. Assess grid availability and plan projects accordingly to minimise curtailment risks.
• Conduct thorough feasibility studies and due diligence to identify suitable project locations and secure necessary permits. Develop strong relationships with financial institutions and explore various financing options to fund renewable energy projects.
• Choose reliable and proven renewable energy technologies suitable for the local conditions. Ensure the quality of equipment, such as solar panels and wind turbines, by selecting reputable suppliers and adhering to recognised standards.
• Negotiate favourable power purchase agreements (PPAs) with off-takers to secure stable and long-term revenue streams. Understand the terms and conditions of the PPA, including pricing mechanisms and grid connection obligations.

Potential sticking points for renewables generators in China include the following:

• The rapid growth of renewables can strain the grid infrastructure, leading to curtailment issues. Engage in dialogue with grid operators and policymakers to address grid integration challenges.
• The government has been reducing renewable energy subsidies to encourage market competitiveness. Stay updated on policies and adapt business models to account for reduced subsidies.
• Land acquisition for renewable energy projects can face challenges due to competing land use interests and complex permit procedures. Engage with local authorities, communities and relevant stakeholders to address land-related issues and streamline the permitting process.
• Fluctuations in electricity demand and market prices can impact on the financial viability of renewable energy projects. Assess market risks, including off-taker creditworthiness and electricity pricing mechanisms, to mitigate potential revenue uncertainties.
• Renewable energy projects must comply with environmental and social standards. Environmental impact assessments, land restoration and community engagement are important aspects.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.