On January 24, 2018, the Friends of Nature Institute (FON) sued the State-owned enterprise, Ningxia State Grid for its high abandonment rate of wind and solar power in violation of Articles 2 and 14 of the Renewable Energy Law. Article 2 provides a definition of "renewables," and Article 14 requires that the grid companies "purchase all electricity generated from renewable energy sources" and "provide connection service."
In this case, Ningxia State Grid failed to purchase all electricity generated by wind and solar energy. Based on that, FON claimed that Defendant should (a) purchase all electricity generated from renewable energy sources within its grid’s coverage; (b) invest 5% of its annual revenue in renewable energy development for five consecutive years; (c) disclose information related to clean energy consumption; (d) offer a public apology; and (e) bear all of the plaintiff’s litigation costs. All of the FON’s allegations were denied by Ningxia State Grid.
On April 4, 2023, the Court ruled that Ningxia State Grid did not violate Article 14 of the Renewable Energy Law and dismissed the majority of the FON’s claims. The Court first confirmed that the State Grid has the general obligation to protect the environment in accordance with the law, regulation, and business standards. However, the Court found that the defendant has met its specific obligation in purchasing wind and solar power. According to the Measures for the Guaranteed Full Purchase of Renewable Electric Power issued by the National Development and Reform
Commission on March 24, 2016, grid companies are required to "purchase all electricity" under Article 14 only if the electricity consumption is safe. Ningxia State Grid has met its renewable energy consumption target, which was confirmed by The Reply Letter Related to FON v. Ningxia State Grid from the Development and Reform Commission of Ningxia Hui Autonomous Region on April 1, 2021. Meanwhile, the Court understood that the enterprise must continue to use coal-fired electricity to assure grid stability because the production of wind and photovoltaic energy is characterized by randomness, intermittency, and volatility. In addition, the Court observed that renewable resources are primarily concentrated in the western region of the country, geographically distant from the power load center situated in the eastern part. Consequently, achieving complete local utilization of these resources poses a significant challenge.
However, the Court also stressed that the State Grid still has social responsibility for facilitating the use of the renewables and shall effectively implement its low-carbon transition plans under the scrutiny of responsible governmental agencies. Also, the Court affirmed FON’s active participation in environmental litigation. In light of the public interest character of the plaintiff's lawsuit and the defendant’s social responsibility, the court ordered Ningxia State Grid to cover 350,000 RMB (49,000 USD) of the plaintiff’s litigation costs.
The FON has appealed.
Case Documents:
No case documents are available.