The majority of the RMB 400 billion ($63 billion) added to a major government fund will be used to pay debt subsidies owed to China’s renewable power generators this year, reports Bloomberg. According to people familiar with the matter, the plan is to totally pay off the arrears this year to help strengthen renewable developers’ balance sheets and give a boost to the country’s efforts to peak and eventually zero out emissions. Some preparation has already begun, including work to calculate total debt due to specific developers, one of the people said.
Renewable companies have been on a tear in recent years, installing record levels of wind and solar as costs fell and to take advantage of government subsidies before they expired. But overdue payments have put a big strain on the financials and shares of the country’s biggest renewable developers.
The market for the past week has been speculating that the added funds would be used for subsidies, after the Ministry of Finance put the extra money in the budget just days after saying on March 5 it would address renewable subsidy shortfalls.