DaWo Law Firm Shanghai, in collaboration with five law firms (De Gaulle Fleurance & Associés, AlMaghthawi & Partners, ENSafrica, Khaitan & Co and Penteris), and ISFIN (an advisory firm focusing on the emerging markets) participated in a comprehensive update on energy transitions in South Africa, Saudi Arabia, China, France, India and Poland. Below we summarize some of the highlights of our update on China’s renewable energy situation.
China is on track to become a global leader in terms of total wind and solar facilities, as well as the number of wind and solar facilities built each year.
According to the report of the National Energy Administration, in 2020, the country’s renewable energy production capacity reached 2,214.8 billion kilowatt hours, an annual increase of 8.4%. These figures are expected to increase in the coming years since President Xi Jinping pledged that China will become carbon neutral by 2060.
Case law review
Disputes may increase in all 4 stages of PV projects (preliminary project development, project investment and construction, project financing mergers and acquisitions, and operation and maintenance). The majority of relevant legal cases can be sorted out in the first instance, which means that parties receive a clear judgment quickly and/or have a high acceptance of the outcome.
Wind energy projects
In recent years, there have been some environmental disputes related to wind power projects, especially over the environmental pollution caused by the projects and the assumption of tort liability. These disputes mainly occur over the ecological pollution produced during the process of wind power development and construction, as well as issues of light and shadow, noise, bird safety, and electromagnetic interference caused by wind turbines.
Recently, a case regarding the bankruptcy and reorganization of a hydropower development business grabbed DaWo’s attention. In this case, the hydropower station expected to generate a considerable amount of money if the generated electricity could be sold for a reasonable price after operations began. However, many problems occurred during the construction phase, such as missed construction deadlines, rapid price rises and cost overruns, as well as disputes arising from expropriation and migration. These problems greatly increased the cost of investment, making the hydropower station less profitable than expected.
DaWo notes a trend that may become more pronounced in the coming years: due to reductions in subsidies and the slowdown in wind market activity, developers’ investments are increasingly focused on the market for the renovation of wind farms and repowering (the construction of Chinese wind turbines started between 2007-2010).
Another important development is that China will replace its policy of subsidizing generation facilities with measures to guarantee the purchase of predetermined quantities of renewable energy from them. If the plant produces more than the guaranteed amount, the excess will be marketed on the energy market. This is an interesting method of support for renewable electricity producers which allows for a gradual integration of producers into a free market, while facilitating the development of renewable energies via state support.
If you are interested in the full text of the renewable energy update on China and other jurisdictions, please click the link below to read the International Energy Transition Observatory:
New International Energy Transition Observatory-DaWo.pdf