What Is a Feed-In Tariff?

The feed-in tariff refers to the metered price at the point where the power grid purchases the power and electricity of the power generation enterprise at the point where the power generation enterprise accesses the main grid. During the transition period of the power reform, the on-grid electricity price mainly implements a two-part price. Feed-in tariffs are an important aspect of coordinating power grids, captive power plants, and relations with the state, and must be determined in accordance with fair and reasonable principles. Generally, it is determined by the unit cost of power generation of the self-provided power plant plus the average profit rate of cost per unit of power generation in the power grid, and then considering other factors. Once the on-grid electricity price of the planned electricity is determined, it will no longer be adjusted at will. To adjust it, you must transfer the corresponding profit retention index and go through the relevant approval procedures. The on-grid electricity price of the unplanned electricity is relatively flexible. Supply and demand can be implemented by the three parties through negotiation or adjustment according to certain principles, and there is no need to go through the relevant approval procedures. ^[1]

among them,

There are three methods for forming feed-in tariffs: individual cost pricing, standard cost pricing, and competition formation.

(1) Individual cost pricing method: its essence is a "cost plus" model, that is, based on the verification of the cost, expenses, and taxes of each power plant, plus a certain return to set the electricity price. For a long time, China has adopted this method to set feed-in tariffs.

(2) Standard cost pricing method: Divide the power production enterprises into several types according to a certain method, refer to the average cost of each type, formulate various standard costs, and use this as a basis to determine the on-grid electricity prices of various types of power production enterprises.

(3) Competition formation method: also known as market pricing method, which means that the buyer and the seller form the price through fair transactions in the market. Can be divided into price competition and price competition. The same price competition may be that the buyer gives an acceptable price, and multiple sellers compete under the same price condition; or the seller gives an acceptable price, and multiple buyers compete under the same price condition. The bidding competition is to use the price advantage to compete. Multiple sellers report the price and available power in different time periods. The buyer sorts the price according to the demand according to the demand, so as to meet the final price balance in the time period (

It divides electricity prices into

On December 23, Premier Li Keqiang hosted an executive meeting of the State Council, which decided to reduce the burden on enterprises, reduce energy consumption, reduce emissions, and adjust industrial structure by reducing the price conflict. According to the changes in power generation costs, starting from January 1, 2016, the on-grid electricity price for coal-fired power generation will be reduced. The average national price will be reduced by about 3 cents per kilowatt-hour. Low-emission transformation and renewable energy development, and set up special funds for the structural adjustment of industrial enterprises to support local governments in phasing out the backward production capacity of the coal and steel industries to place laid-off workers. At the same time, we will improve the coal-electricity price linkage mechanism, continue to implement differentiated, punitive, and tiered electricity prices for high-energy-consuming industries, and promote industrial upgrading. ^[4]