China's Renewable Quota System goes for final drafting

Wind and solar energies to benefit the most.

The final draft of Renewable Quota System has also been reported. Under the new standard, all provinces and grid companies will be required to meet renewable power generation adoption targets.

Here's more from Maybank Kim Eng:

We believe the final draft will be released before year end. Our comments: This is positive news for renewable energy such as wind and solar as it will drive more installation growth in 2014-15. Reiterate BUY on GCL-Poly, Longyuan and Huaneng Renewables.

Meanwhile, the government aims to limit the unit coal consumption of new coal-fired power plants to less than 300g/kWh by 2020.

Forr existing plants, coal consumption will be limited to no more than 310g/kWh this implies power generators will improve the coal efficiency of existing and new power plants.

As IPPs are expected to construct larger generation units to boost fuel efficiency, their capex will increase.

This will be slightly negative for IPPs in the short term but will help lower fuel cost longer term due to improved efficiency.

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