The National Energy Administration recently announced a significant policy change, exempting certain power generation projects from the requirement of obtaining a power business license. This move aims to streamline the licensing process and foster a more flexible environment for the growth of distributed and clean energy initiatives.
According to the "Notice on Clearly Explaining Matters Concerning Power Business License Management," new energy projects such as solar and wind power that are registered or approved as distributed energy projects with a capacity of 6MW (excluding) will no longer need a power generation license. This decision reflects a broader effort to reduce administrative burdens and encourage renewable energy development.
The power business licensing system was originally introduced by the State Electricity Regulatory Commission in 2005. It required all entities engaged in power generation or distribution to obtain a license. This system was inspired by regulatory models in countries like the U.S. and Europe, aiming to bring structure and oversight to China's power sector.
In line with the national push for decentralization, the management of power business licenses has been gradually transferred from a centralized model to a more localized approach. In 2013, the National Energy Administration delegated the responsibility of issuing these licenses to local dispatch agencies. This shift is part of an ongoing effort to reduce unnecessary administrative interference and improve efficiency.
Historically, small hydropower and wind power projects have faced weak enforcement when it came to licensing. For example, Yunnan alone is home to thousands of small hydropower stations, many of which operate without formal permits. A 2012 survey by the former State Electricity Regulatory Commission found that over 550 grid-connected power plants lacked proper licenses, mostly due to being self-owned or small-scale facilities.
Now, under the new policy, several categories of power generation projects are exempt from needing a license. These include:
- Distributed power generation projects that have been officially filed or approved.
- Small hydropower stations with a single unit capacity below 1MW.
- Solar, wind, biomass, ocean, and geothermal projects under 6MW.
- Waste heat and pressure resource utilization projects under 6MW.
- Non-fossil fuel direct combustion power stations managed at the prefecture level or below.
Businesses operating under these exemptions no longer need to provide a power generation license when connecting to the grid. They can now proceed with grid connection procedures without this additional documentation.
For enterprises with a total installed capacity of 6MW or less, the application process for power business licenses has also been simplified. The changes affect both financial and personnel requirements. For instance, companies established for more than two years are no longer required to submit annual financial reports for the past two years. Instead, they can provide just the latest two-year financial statements.
Newer companies, those established for less than two years, are not required to submit financial reports, capital verification reports, or audit reports since their inception. They can simply provide financial statements from the time of establishment.
Additionally, the policy allows individuals to hold multiple roles within a company, such as overseeing both security and production operations. This flexibility is intended to support smaller operators and reduce bureaucratic hurdles.
Overall, this reform marks a step forward in making the energy sector more accessible and efficient, particularly for small-scale and renewable energy projects.
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