context: Financial institutions are encouraged to cooperate more with renewables companies to ease their cash flow hardships. Bank loans, however, might not be an effective solution as they will increase renewable firms' debt burdens and financial institutions may be reluctant to grant loans.
NDRC (National Development and Reform Commission) and four other central departments jointly issued 'Notice on increasing financial support to promote the healthy and orderly development of wind and solar power industries' on 12 Mar 2021, aiming to to tackle financial stresses faced by renewable energy companies. The document clarifies that
- local governments and financial institutions should support companies in wind, solar, biomass power generation and other renewable industries
- financial institutions can
- negotiate with renewables companies that are subject to short-term repayment pressure but have good long-term prospects to extend, renew or adjust payment schedules
- grant loans to firms based on the upper limit of unpaid subsidies which have been already confirmed by relevant authorities
- loan size, term and interest rate should be negotiated by both parties
- interest costs shared by companies may be compensated through the issuance of green certificates
- ensuring that subsidies are fully collected through renewable surcharges
- companies can choose whether to convert their projects to grid-parity ones, which will receive subsidy funds first
- pilots will be introduced to explore ways to address subsidy shortfalls
Heralding the new policy, industry siders says that how it will be implemented remains to be seen. Multiple measures are required to fundamentally solve the subsidy issues, points out Tao Ye 陶冶 NDRC Energy Research Institute deputy director. He adds that loans may have limited appeal to SOEs with high debt ratios.