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China to hike wholesale hydropower electricity price
Updated: 2009-09-20 22:54

BEIJING: China would make pilot moves to raise hydropower electricity prices in a bid to subsidize residents who made way for the power projects, Zhang Guobao, vice minister of the National Development and Reform Commission, China's top economic planning agency, said over the weekend.

"The commission is about to raise hydropower electricity prices to the same level as coal-fired power plants in a pilot move," Zhang was quoted as saying by the Caijing business magazine Saturday.

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But he did not say when the pilot move would be launched and in what regions.

"However, there are still difficulties to finally make such hydropower electricity prices the same as coal-fired power plants, " Zhang said at a forum on the sustainable development of hydropower.

Electricity from hydropower plants is sold at 0.2 yuan ($0.03) to 0.3 yuan per kilowatt-hour to power distributors, and it is lower than 0.4 yuan to 0.5 yuan per kilowatt-hour for electricity from coal-fired power plants.

Such prices are based on operational costs of different power plants and a reasonable profit margin, when the commission set the prices.

Compared with coal-fired power plants, hydropower plants usually require a larger sum of investment for the construction, but run at lower costs upon completion.

"In the end, prices of electricity from most hydropower plants are set lower than those from coal-fired plants," said Zhang.

Lower pricing for hydropower electricity has been criticized as the country's hydropower projects expanded.

By the end of 2008, China's installed capacity of hydropower facilities reached 170 million kilowatts, and the country's hydropower plants generated 563.3 billion kilowatt-hours last year, according to the China Electricity Council, the industry association.

That means hydropower plants accounted for 21.6 percent of the country's total installed capacity, and 16.4 percent of the total electricity output last year, only next to that of coal-fired power plants.

"Currently, compensation for relocated residents has become the biggest obstacle to the development of hydropower plants in China," Zhang said.

For instance, China had relocated 1.27 million people by the end of June to make way for the giant project of the Three Gorges Dam, initiated in 1993.

Zhang said raising hydropower electricity prices to subsidize the relocated residents in regions where there are dire needs for such funds could be a possible plan for the commission.