China cuts subsidies for some renewable power projects - finance ministry

SHANGHAI (Reuters) - Some Chinese biomass and waste-to-energy plants will no longer be eligible for renewable energy subsidies, the country's finance ministry said on Friday, as it bids to resolve a huge payment backlog.

The Ministry of Finance has been struggling to find the funds to pay a subsidy backlog now amounting to an estimated 120 billion yuan ($18.7 billion), following a rapid surge in solar and wind capacity.

The ministry said in a notice that biomass and waste-to-energy plants, including "co-fired plants" that burn a mixture of coal, forest waste and household refuse, would no longer be entitled to financial support.

The move follows a decision earlier this month to cut subsidies for new solar power plants this year and also restrict the number of new projects.

China has sought to phase out subsidies for renewable projects, but it has promised to replace them with more direct policy support.

It aims to give clean energy plants priority access to the grid, and will also introduce a mandatory renewable quota system later this year.

Grid firms have been accused of failing to meet their legal obligation to buy all the renewable power available in their jurisdiction, preferring instead to source cheaper coal-fired power.

The finance ministry also said on Friday that it would now allow grid companies to pass on some renewable energy connection costs to customers.

($1 = 6.4149 yuan)

(Reporting by David Stanway; editing by Richard Pullin)