China Power’s results show how much cheaper solar is to coal


The numbers don’t lie and – according to China Power’s results – coal needs to make way for solar.

The Hong Kong-listed utility, owned by China’s State Power Investment Corp Ltd, generated $1.183 billion from coal, and $128 million from solar, but the renewable resource won the profit battle, with profits for the period January to June totalling $40 million, beating out coal’s contribution by $4.3 million.

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The reason for the disparity comes down to the cost of production, with generous government subsidies for solar giving coal a bit of insult to go with the injury, not to mention government-led efforts to reach grid parity between renewables and fossil-fuel generation.

Coal-related finance costs totalled $80.8 million, whereas PV finance was almost half as much at $35.5 million, and generated income to the tune of $3.9 million, versus coal’s $963,000 contribution.

Furthermore, whilst China Power’s PV division benefited from an income tax credit of $209,000, the coal unit had to pay over $23 million to the taxman.

Depreciation is also dearer for coal assets, which cost the utility an estimated $127 million during the first six months of the year, versus the $38.5 million in depreciation related to ageing PV projects. The amortisation of payments over a longer-term, typical of distributed resources like solar or wind cost China Power approximately $3.1 million but that was partly offset thanks to no disposal of solar plant equipment, but the shuttering of coal infrastructure and equipment cost the utility in the region of $1.35 million.

The average solar electricity tariff in the country is $84 per megawatt-hour (MWh) sold, whereas coal yielded just $45.

Whilst the picture may change following the Chinese government’s decision to cut back on solar subsidisation, the cost of solar has already dropped by $14.50/MWh compared with the same period in 2018.

The results echo related findings by Sweden’s Mälardalen University, which noted that even if subsidisation was reduced or eliminated, solar projects could now be built in most Chinese cities at a significantly cheaper price than coal, hydropower, nuclear and other grid-fed generation-sources.

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Asian Utility Week 2019