China’s Coal Capacity Payments to Boost Power Reliability, Cut Emissions in Commodity News 09/02/2026 China’s new fixed-cost reimbursement scheme for coal plants should stabilise cash flow in provinces with thermal-heavy portfolios, and reduce emissions by discouraging uneconomic coal dispatch when renewables are abundant, Fitch Ratings says. The policy pays eligible units for availability rather than output, supporting energy reliability while changing how coal plants earn returns. The shift from volume to capacity value has implications for utilisation, earnings volatility and transition risk. China’s coal-fired generation declined in 2025 for the first time in a decade as renewables met a larger share of incremental demand, while coal capacity additions continued. This has widened the gap between installed capacity and utilisation, with coal load factors hovering in the low-50% range in recent years. The new framework addresses that mismatch by compensating coal plants by a defined share of fixed costs – benchmarked nationally at CNY330 per kilowatt (kW) – regardless of operating hours, supporting coal’s role as a flexible back-up during periods of peak demand and low renewable output. The near-term benefit to coal plant margins may still be limited and uneven across regions. The increase in capacity payments from CNY100 to CNY165 per kW is equivalent to about CNY16 per megawatt hours (MWh), assuming 2025 utilisation hours. However, 2026 annual contract prices have fallen by more than that in many provinces; annual contract prices are down by CNY50-70 per MWh in some coastal provinces. As a result, dark spreads (between the effective tariff and unit coal cost) are likely to narrow in 2026 despite the higher capacity payments, with inland and northern provinces potentially less affected as their annual contract prices have been more stable. Over time, higher capacity payments should strengthen coal plants’ business profiles by improving fixed-cost recovery and supporting Chinese policymakers’ push to expand spot trading. In spot markets, coal-fired generators often recover variable costs but struggle to cover fixed costs, as seen in early-adopter provinces such as Guangdong. Higher capacity payments help close that fixed-cost gap, which could reduce volatility as spot exposure rises. For wind and solar, the new mechanism may pressure earnings from electricity sales, as these projects do not receive capacity payments and market power prices may fall. Existing projects that have a large share of output still sold under mechanism tariffs – mostly projects commissioned before May 2025 – should see limited impact, while newer projects with less protected volumes and higher spot exposure will be more affected. A clearer price signal could also encourage more disciplined renewable investment and reduce loss-making bids. The change should benefit independent energy storage systems. Regulators have confirmed that storage will be eligible for capacity payments on top of charge-discharge arbitrage revenues, improving revenue stability and potentially supporting new installations. Source: Fitch Ratings 2026-02-09 hellenicshippingnews... window.___gcfg = {lang: 'en-US'}; (function(w, d, s) { function go(){ var js, fjs = d.getElementsByTagName(s)[0], load = function(url, id) { if (d.getElementById(id)) {return;} js = d.createElement(s); js.src = url; js.id = id; fjs.parentNode.insertBefore(js, fjs); }; load('//connect.facebook.net/en/all.js#xfbml=1