According to the "Notice from the National Development and Reform Commission and the National Energy Administration on Establishing and Improving the Mechanism for Guaranteeing Renewable Energy Power Consumption" (NDRC Energy [2019] No. 807), and the "Notice from the General Office of the National Development and Reform Commission and the Comprehensive Department of the National Energy Administration on Issuing the Outline for Preparing Provincial-Level Implementation Plans for Guaranteeing Renewable Energy Power Consumption."

The Polar Star Wind Power Network has learned that the Henan Provincial Development and Reform Commission recently issued a notice soliciting comments on the "Implementation Plan for Guaranteeing Renewable Energy Power Consumption in Henan Province." The original text reads as follows:

Notice on Soliciting Comments on the "Henan Province Renewable Energy Power Consumption Guarantee Implementation Plan"

To all relevant organizations and market entities:

According to the "Notice from the National Development and Reform Commission and the National Energy Administration on Establishing and Improving the Mechanism for Guaranteeing Renewable Energy Power Consumption" (NDRC Energy [2019] No. 807), the "Notice from the General Office of the National Development and Reform Commission and the Comprehensive Department of the National Energy Administration on Issuing the Outline for Preparing Provincial-Level Implementation Plans for Renewable Energy Power Consumption Guarantees" (NDRC Office Energy [2020] No. 181), and the "Notice from the National Development and Reform Commission and the National Energy Administration on Issuing the Renewable Energy Power Consumption Responsibility Weight Targets for Each Provincial Administrative Region in 2020" (NDRC Energy [2020] No. 767), we have organized the drafting of the "Henan Province Renewable Energy Power Consumption Guarantee Implementation Plan (Draft for Comments)." We are now soliciting opinions from relevant organizations, various market entities, and all sectors of society.

If you have any comments or suggestions, please provide your feedback promptly. Also, please leave your contact information so we can reach out to you in a timely manner.

Feedback period: November 24 to November 30.

Contact: Zhang Tonglei 0371-69691327 / 69691527 (Fax)

Email: hnsxny@163.com

Attachment: "Henan Province Renewable Energy Power Consumption Guarantee Implementation Plan" (Draft for Comments)

November 24, 2020

Attachment: Henan Province Renewable Energy Power Consumption Guarantee Implementation Plan

To thoroughly implement General Secretary Xi Jinping’s important remarks on the energy production and consumption revolution, accelerate the establishment of a clean, low-carbon, safe, and efficient energy system, and effectively carry out the responsibility-weight allocation for renewable energy power consumption, this Implementation Plan has been formulated based on the "Notice from the National Development and Reform Commission and the National Energy Administration on Establishing and Improving the Mechanism to Guarantee Renewable Energy Power Consumption" (NDRC Energy [2019] No. 807), the "Notice from the National Development and Reform Commission and the National Energy Administration on Issuing the Renewable Energy Power Consumption Responsibility Weights for Each Provincial Administrative Region in 2020" (NDRC Energy [2020] No. 767), and the "Notice from the General Office of the National Development and Reform Commission and the Comprehensive Department of the National Energy Administration on Issuing the Outline for Preparing Provincial-Level Implementation Plans for Renewable Energy Power Consumption Guarantees" (NDRC Office of Energy [2020] No. 181). These documents have been tailored to align with our province’s specific circumstances.

I. General Requirements

(1) Guiding Ideology

Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, we will deepen the energy production and consumption revolution, accelerate the transition toward clean and low-carbon energy, and promote high-quality development of renewable energy by implementing monitoring and assessment of renewable energy power consumption responsibility weights, while refining an efficient and robust mechanism to ensure the effective integration of renewable energy into the power system.

(II) Indicator Definition

The renewable energy power consumption obligation refers to the proportion of renewable energy electricity that each provincial administrative region is required to achieve in its electricity consumption. This includes the overall renewable energy power consumption obligation (referred to as the "total consumption obligation") and the non-hydro renewable energy power consumption obligation (referred to as the "non-hydro consumption obligation"). Renewable energy electricity that meets the total consumption obligation covers all types of renewable energy generation; meanwhile, renewable energy electricity meeting the non-hydro consumption obligation excludes hydropower and encompasses all other renewable energy generation sources. For the minimum consumption obligation levels set, incentive-based consumption obligations are determined based on exceeding a certain threshold.

(III) Work Objectives

Establish and improve a robust mechanism to ensure the consumption of renewable energy power, continuously increase our province's capacity to absorb renewable energy electricity, fulfill the national targets for consumption responsibility weights, and ensure that renewable energy power across the province consistently maintains a reasonable utilization level.

II. Mechanism for Implementing Consumption Guarantee

(1) The energy regulatory authority under the State Council annually assigns renewable energy power consumption responsibility weights to each provincial-level administrative region.

(II) The Provincial Development and Reform Commission will take the lead in assuming responsibility for implementing the renewable energy consumption targets. In collaboration with the Henan Energy Regulatory Office, it will annually organize the development of implementation plans for renewable energy power consumption (hereinafter referred to as the "Implementation Plan"), and conduct performance assessments on market entities responsible for meeting these consumption targets.

(3) The provincial power company assumes the organizational responsibility for implementing the consumption obligation targets. Based on the implementation plan, it will formulate detailed rules for executing these targets and oversee the completion of each market entity within the province that is assigned to meet its respective consumption obligations.

(4) Market entities responsible for consumption and accommodation shall actively and proactively fulfill their consumption and accommodation responsibility weights according to the implementation plan.

(5) The Provincial Development and Reform Commission has authorized the Provincial Electricity Trading Center to manage information for market entities within the province that are responsible for absorbing renewable energy. This includes overseeing market entity account registration, calculating and transferring renewable energy consumption volumes, as well as handling related tasks such as information reporting, analysis, and evaluation.

3. Market Entities and Renewable Energy Consumption Obligation Allocation

(1) Market entities responsible for absorption fall into two categories.

Market entity type 1 (power sales companies)

1. The provincial power company bears the responsibility weight for accommodating renewable energy equivalent to its annual electricity sales volume.

2. Enterprises directly supplying (selling) electricity to power users outside the provincial power company, independent power sales companies, and power sales companies that hold distribution network operation rights (referred to as "distribution-and-sales companies," including incremental distribution project companies), etc., shall assume the consumption responsibility weight corresponding to their annual supply (sales) volume of electricity.

The second category of market entities (electricity users)

3. Electricity users who purchase power through the electricity market (excluding those who buy power via a power sales company). These users bear the consumption responsibility weight corresponding to their annual electricity consumption.

4. Enterprises with self-owned power plants bear the consumption responsibility weight corresponding to their annual electricity consumption.

(2) The Provincial Development and Reform Commission, based on the annual weighting indicators set by the state, determines the allocation plan for consumption responsibility weights among various market entities within the province, issuing it annually.

In 2020, the overall consumption obligation target for market entities within the province was set at 17.5%, while the non-hydroelectric consumption obligation target stood at 12.5%. For future annual targets, further notice will be issued once they are determined by the national energy authorities.

(III) Among the sales and consumption volumes of electricity by market entities bearing the consumption obligation, agricultural electricity usage and heating electricity measured specifically for dedicated purposes are exempt from the consumption obligation weight assessment. Meanwhile, all market entities responsible for meeting the consumption targets shall collectively assume the consumption volume corresponding to provincial-level network losses and plant-use electricity.

IV. Market Entity Management Mechanism

(1) All market entities responsible for consumption and accommodation obligations must complete account registration or withdrawal procedures at the provincial electricity trading center before the official start of the annual assessment year. The provincial electricity trading center will then submit to the Provincial Development and Reform Commission the list of market entities within the province that are accountable for consumption and accommodation responsibilities this year.

(2) Market entities responsible for renewable energy consumption shall formulate an "Renewable Energy Power Consumption Plan" annually, outlining their requirements and preliminary arrangements for fulfilling the consumption targets, and submit these plans to the Provincial Development and Reform Commission, the Henan Energy Regulatory Office, the Provincial Power Company, and the Provincial Electricity Trading Center. Enterprises with self-owned power plants that are not connected to the public grid shall also prepare an annual "Renewable Energy Power Consumption Plan" and submit it to the Provincial Development and Reform Commission, the Henan Energy Regulatory Office, the Development and Reform Commission of their respective provincial-level city, and the Provincial Electricity Trading Center.

(III) The Provincial Development and Reform Commission will publicly release the list of market entities within the province that are responsible for accommodating renewable energy consumption this year, proactively inviting public oversight.

5. Fulfillment of Renewable Energy Consumption Obligations

(1) Main fulfillment methods: Purchasing or self-consumption of renewable energy electricity. Market entities responsible for absorbing renewable energy shall fulfill their absorption responsibility weights based on the actual amount of renewable energy electricity they have absorbed (referred to as "absorption volume").

(II) Supplementary Methods of Performance:

1. Purchase the renewable energy consumption credits oversubscribed by other market entities, with both parties independently determining the transaction or transfer price.

2. Purchase green electricity certificates for renewable energy; the corresponding amount of renewable energy represented by the green certificates will be counted as consumption volume.

(III) Calculation of Absorption Capacity

1. Purchase renewable energy electricity through the market. The provincial power company fully guarantees the purchase of renewable energy electricity and allocates it among market entities within its operating area based on their respective responsibility weights, with the allocated volume counted toward each entity's consumption obligation. Renewable energy electricity traded in the power market is credited to the consumption obligations of market participants according to the actual settlement volume of the transaction.

2. Self-generated and self-consumed renewable energy electricity. The entire amount of self-generated electricity consumed on-site, as measured by grid companies, will be fully counted toward the consumption capacity of the entities engaged in self-generation and self-use.

3. Supplementary methods for fulfilling consumption obligations: Consumption obligations fulfilled through purchases from other market entities bearing such responsibilities—or via green certificates converted into consumption credits—will be counted toward the buyer’s own consumption targets. Meanwhile, consumption credits sold or already transferred by market entities with mandatory consumption obligations, as well as those corresponding to green certificates sold, will no longer be included in that entity’s consumption tally. In line with the principle of equal rights and responsibilities, consumption credits associated with agricultural electricity use exempted from consumption obligation assessments, or heating electricity measured separately for dedicated purposes, cannot be used for trading or transfer under any circumstances.

(Four) Allocation of renewable energy electricity consumption corresponding to the full-guaranteed purchase obligation. First, this allocation will be used to fulfill the consumption obligations for residential users, essential public utilities, and non-market-based electricity consumption within the service area. If there is any remaining capacity, the provincial power company will distribute it based on the purchasing or usage volumes of each market participant in the region—excluding enterprises with self-owned power plants that are not connected to the public grid, as well as independently operated grid companies. Initially, the distribution will follow a non-compensated principle, with adjustments made at an appropriate time as the electricity market reform progresses.

(5) With the continuous expansion of renewable energy generation capacity and the ongoing progress in electricity market reforms, renewable energy projects that achieve grid parity—or generate electricity beyond the guaranteed purchase volume—are encouraged to participate in various forms of electricity market transactions. This will fully leverage the low marginal cost advantage of renewable energy power, thereby promoting greater and more efficient utilization of renewable energy resources. Grid enterprises and electricity trading institutions should, in accordance with relevant market rules, prioritize the execution of renewable energy generation plans and renewable energy power trading contracts. Separate market rules governing renewable energy power trading will be formulated separately.

6. Task Allocation

(1) The Provincial Development and Reform Commission, in accordance with the nationally defined renewable energy consumption responsibility targets, will collaborate with relevant departments to formulate annual implementation plans. These plans will specify the minimum renewable energy power consumption responsibility targets for all market entities within the province that are accountable for meeting these targets, and will also ensure timely account registration and data submission by these market participants.

(2) The energy authorities of prefecture-level cities shall, according to the implementation plan, supervise and ensure that relevant market entities within their jurisdictions fulfill their commitments. They will also urge those entities failing to meet the consumption and allocation targets within the specified timeframe to make rectifications without delay. In collaboration with grid enterprises, they will compile and verify a list of companies operating captive power plants along with relevant data, and encourage these companies to submit their information to the provincial electricity trading center as required. Furthermore, efforts will be made to continuously optimize the business environment and accelerate the development and utilization of renewable energy resources.

(3) The provincial power company shall submit, by the end of January each year, a report to the Provincial Development and Reform Commission and the Henan Energy Regulatory Office on the completion of organizational work related to the consumption responsibility weights for the previous year within its operating area.

(4) The Provincial Electricity Trading Center is responsible for organizing and conducting renewable energy-related electricity transactions within the province, guiding market participants involved in electricity trading to prioritize fulfilling their respective power consumption obligations. Additionally, the center will provide reminders to market entities bearing these obligations during key stages such as reviewing medium- and long-term electricity trading contracts and publishing electricity trading information.

(5) The Provincial Electricity Trading Center shall submit, on a quarterly basis, the fulfillment status of consumption responsibility weights by each market entity to the Provincial Development and Reform Commission and the Henan Energy Regulatory Office. Additionally, by the end of January each year, it must report the completion status of consumption responsibility weights for the previous year.

(6) Market entities responsible for fulfilling consumption obligations shall submit their progress reports on the fulfillment of these obligations to the Provincial Electricity Trading Center by January 15 and July 15 each year, and commit to the authenticity and accuracy of the data provided. Enterprises with self-owned power plants that are not connected to the public grid, as well as independently operated grid companies, must also simultaneously report their completion status to the Development and Reform Commission of the city under their jurisdiction.

(7) The Henan Energy Regulatory Office is responsible for overseeing the fulfillment of consumption obligation weights by all market entities within the province that bear such responsibilities, as well as monitoring related renewable energy trading processes.

7. Relevant Measures

(1) The Provincial Development and Reform Commission will assess and publicly announce the annual renewable energy consumption obligation fulfillment status of market entities. When the province as a whole is on track to meet its targets, monitoring and timely reminders will suffice for individual market entities. However, if the province as a whole fails to achieve its targets, the Provincial Development and Reform Commission, together with the Henan Energy Regulatory Office, will take responsibility for urging those market entities that have not fulfilled their renewable energy consumption obligations to make rectifications within a specified deadline. Non-compliant entities will face penalties in accordance with laws and regulations, be added to the list of entities with poor credit records, and be subject to joint disciplinary actions. Additionally, the Commission will develop targeted punitive measures for market entities that persistently refuse to fulfill their renewable energy consumption obligation responsibilities.

(II) Market entities responsible for consumption and accommodation obligations should actively and proactively fulfill these responsibilities. Market entities meeting the necessary conditions are encouraged to voluntarily exceed the minimum consumption and accommodation responsibility weights set by the Provincial Development and Reform Commission. For market entities included in energy consumption assessments, any energy consumption volume converted from their overfulfilled consumption and accommodation responsibilities will not be counted toward their overall energy consumption targets.

(3) In cases where renewable energy generation significantly decreases or transmission is restricted due to natural causes, major accidents, or other force majeure events, the corresponding consumption responsibility weights may be adjusted upon approval from the National Energy Administration. The Provincial Development and Reform Commission will then assess market entities based on the nationally approved, reduced consumption responsibility weights.

(4) Grid enterprises, power distribution and retail companies, as well as enterprises with self-owned power plants that are not connected to the public grid, shall be responsible for the accuracy of the data they provide to the provincial electricity trading center. If any false information is detected and verified, the Provincial Development and Reform Commission, in collaboration with the Henan Energy Regulatory Office, will impose penalties on these entities in accordance with relevant regulations.

(5) Other safeguard measures will be formulated by the Provincial Development and Reform Commission based on actual conditions.

VIII. Other

(1) This implementation plan will be piloted for three years; should there be any adjustments to relevant national or provincial policies, this implementation plan will be adjusted accordingly.

(II) This implementation plan is to be interpreted by the Provincial Development and Reform Commission.