An increasing number of photovoltaic power station companies are seeking to offload their plants after the country’s recent power market reforms led to a big drop in grid prices, stoking concerns about the future profitability of the business, industry insiders told Yicai.
“We are receiving several calls a day from power station owners wanting to sell their plants, and many are repeatedly lowering their asking price,” a broker who deals in new energy power station sales told Yicai. "In the past, there were investors everywhere, but now the PV industry is becoming more and more difficult to operate in.”
It is no longer just a matter of selling to quickly gain a return on their investment, insiders said. Now, after the marketization of grid-connected prices, more green power station owners are opting to sell due to uncertainties about future returns.
For example, the grid used to pay over CNY0.30 (USD0.04) per kilowatt hour to new energy power stations, but since electricity prices were allowed to be determined by the market, many provinces lowered the price they pay for solar power. For example, sun-rich northwestern Gansu province is only paying a time-of-use rate of CNY0.154 per kWh for energy purchased from 9 a.m. to 5 p.m.
On top of the lower prices, solar power station operators are asked to bear the cost of renewable energy’s unstable power generation, which they did not have to do in the past, and this is likely to continue to be a major trend in the future, they added.
"With the explosive growth of PV installed capacity, solar power station owners now need to cover the grid operating costs, an expense that they have not borne before,” said Lin Boqiang, director of the China Energy Policy Research Institute at Xiamen University. “They either need to add battery storage to the power station, or they need to accept the time-of-use electricity price given by the grid, which is much lower than before."
PV power stations need to generate income from other sources, not just the sale of electricity, Lin said. The green electricity market is not yet fully developed, and so it is not possible to completely reflect the value of a renewable energy power station, but this value should be realized in the future.
"Investors who are willing and able to wait until solar power stations fully realize their value, such as state-owned enterprises and wealthy private businesses, are the most suitable group to take over these assets," Lin said.
（Picture: Veer）
