Reuters reported that China plans to raise the price of power generated from renewable sources over the next two years in order to stimulate clean energy investment.

When China's grid firms sell electricity from renewable sources they are currently allowed to charge CNY 0.004 per kilowatt hour more than conventional thermal power.

According to the official from China Power News, the China Electricity Regulatory Commission will increase the additional levy to CNY 0.006 per kilowatt hour either in 2011 or 2012.

Mr Huang Shaozhong of the CERC's price monitoring department said that China had to address the growing subsidy gap in order to meet its goal to raise the share of non fossil fuel energies to 15% of the total by 2020.

He said that the current levy raises around 10 billion yuan per year, which was only enough to cover around 70% of the subsidies offered to renewable energy producers.

China's renewable energy law obliges grid firms to buy all the renewable electricity produced in their region, even though it is more expensive than coal fired power, but it also allows them to charge additional fees for clean electricity sources.

China keeps electricity prices under tight control, and its utilities have suffered massive losses in the last year because they have been unable to pass on rising raw material costs.

Government sources told Reuters that on grid tariffs could be increased next month in certain regions, and could lead to higher retail prices for enterprises.

(Sourced from www.reuters.com)