The higher cost in renewable energy-fired power generation may lead to a slight rise of the electricity tariff for consumers next year, according to sources from the research institute under the National Development and Reform Commission (NDRC).

In the process of optimising China's energy mix, the promotion of renewable energy-driven power generation also means a higher operation cost due to the new technology and equipment, according to Song Yanqin, deputy director of the Centre of Renewable Energy Development at the NDRC's energy research institute.

"It is justified to pass the increased cost on to the public end users, because the use of renewable energy resources to generate electricity are for the benefit of all the Chinese residents in the long run," Song told reporters on the sidelines of the China Power 2005 conference, which ended yesterday in Beijing.

If the general public is to be burdened by the higher cost, Song predicted, the electricity tariff will only see a slight rise of less than 0.01 yuan (0.12 US cent) per kilowatt-hour on average.

"The proposed specific regulation about the tariff rise to accompany the forthcoming renewable energy law have not been decided, although it seems to be the most feasible one and will not exert much pressure on the public," added Song.

And further consideration should be given to the country's economically disadvantaged groups such as the farmers, according to Song. "These (disadvantaged) groups are not supposed to take on the possible tariff increase," he said.

The money collected through the increased electricity tariff is to provide a special fund designed to promote the use of renewable energies by subsidizing the renewable energy-driven power generators, Song said.

The renewable energy development fund will be specified in the country's 2006 annual budget, Song told reporters.

Concerning the timeline of the possible tariff hike, Song said, the final decision has not been made. "The whole thing is still under discussion by the policy makers. The finalized detailed rules for the new energy law are expected by the end of the year just before the country's first renewable energy law takes effect from the beginning of next year."

And the tariff hike is only a possibility, with other options still being considered by the government, Song stressed.

"For example, it is also practical for the country's grid companies to absorb the higher cost by power producers, if they are willing to," the deputy director said.

Coal-fired plants account for 73.9 percent of the country's total 440 gigawatts installed capacity in 2004, and renewable energies only take up a very small proportion.

(China Daily August 12, 2005)