Is Hong Kong FiT for renewables?
Fiona Donnelly, TPB’s business development lead, looks at what the new Feed-in Tariffs (FiT) mean for Hong Kong.
The way Hong Kong produces electricity is changing for the better and towards a cleaner fuel mix, but location on the planet and geographical limitations will probably preclude Hong Kong from ever being a hot bed for the adoption of renewable energy technologies.
Today’s energy generation in Hong Kong from renewable sources amounts to only around 1% and with technologies improving all the time in terms of effectiveness, efficiency and payback, it feels like Hong Kong would score a ‘must try harder’ on a renewables’ report card.
The Hong Kong Government has said that the territory has realisable renewable energy potential of about 3-4% through using wind, sun and waste to energy. While other views, such as WWF Hong Kong, are more bullish and reckon around 30% of electricity could be generated from local renewable sources by 2050.
To incentivise more generation of electricity from sustainable clean sources by the private sector and individuals, the Government working with the two electricity companies, has launched feed in tariffs and renewable energy certificates.
8 things you need to know about this new regime:
- With effect from 1 October 2018 for CLP customers and 1 January 2019 for HK Electric customers, those who generate electricity from solar photovoltaic and wind systems in Hong Kong and send the power to the grid will be paid for what they generate through a feed in tariff (FiT). Consumers may choose to buy electricity generated from local renewable sources through buying renewable energy certificates (RECs), assuming demand does not outstrip supply.
- This new scheme will run until 2033 ie for 15 years, so there’s an incentive to apply and enjoy the benefits as soon as possible and for as long as possible.
- FiT can apply to the hundreds of renewable projects that are already operating.
- It is hoped that FiT will give a financial incentive to producing more renewable energy and will generate more community involvement. The Government has set the FiT rates at $3, $4 and $5 per unit of electricity depending on the generation capacity of the renewable energy system concerned.
- RECs will be created as renewable energy is generated, so they will be finite in numbers but increasing in supply as more and more clean energy is sold to the grid.
- Buying RECs will be a voluntary decision of the consumer. Choosing to consume such ‘green’ energy will come at a premium over the regular price of electricity. The premium is likely to be around 20-50%, and it will be interesting to see how the market will respond to this premium.
- Buying RECs will give purchasers green credentials and a way to offset carbon generated through other activities.
- The new regime provides yet another reason for people and enterprises to review their approach to electricity. Of course, the simplest of changes can be effected immediately: change the thermostat on your aircon and consume less electricity.
This is a welcome development for Hong Kong, not least because it is one way the territory can make changes and help progress towards China’s Nationally Determined Contributions that came into force in The Paris Agreement in November 2016. In time, consumers will be able to choose their electricity supply and in making that choice will become more aware and sensitised to the issues around renewable energy. This is a good step of itself as we all need to be more aware of the impact of our choices. Businesses should also consider new developments like these as part of sustainability and energy strategies that look at opportunities as well as the risk issues.
If you would like to talk about sustainability in your business, please contact Fiona, for an informal chat.
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