Chinese companies are gearing up to take full advantage of the conducive investment and regulatory policies in place and being unveiled in China. Hareon Solar is the latest to announce a hefty investment strategy to install distributed solar power capacity.
The company will install a massive 600 MW capacity in the Hebei province at a cost of almost $1 billion. During the first phase, the company plans to install 300 MW capacity rooftop solar power projects. The capacity will be implemented through leasing of rooftops.
The plan announced by Hareon will make significant contribution to China’s target to have 8 GW distributed solar power capacity by 2015. The company had last year announced plans to invest $1.6 billion to install 1,000 MW solar power capacity in Inner Mongolia province. The overall capacity target is set at 35 GW by end of 2015. By the end of 2013, China had an installed solar power capacity of 19.4 GW.
Achieving such a capacity is no mean task. The government has realized this and has recently announced several measures for large-scale as well as distributed solar power projects. In June, the government made regulatory changes to enable easier transactions for homeowners selling electricity generated from rooftop solar power systems.
The homeowners can now use an easier invoicing system for the electricity sold, and can also submit their VAT claims with the State Grid Company itself instead of the tax regulator. The government introduced these measures as the capacity addition in the small-scale solar power segment was sluggish, and banks were hesitant to provide funding for such projects.
For large-scale projects, the government has issued template for long-term power purchase agreements which would provide certainty and confidence to project developers as well as lenders.
Another reason for the surge in project activity and changes in the regulatory procedures is the trend of increasing anti-dumping duties being levied on Chinese solar equipment around the world. China is the world’s largest exporter of solar cells and modules, but Chinese companies are facing duties from several countries and jurisdictions, including the US, EU and India. Thus, it is essential that the government creates enough demand for solar power equipment within the country to sustain an industry worth billions of dollars.
All these polices are being directed by China’s national target to reduce carbon intensity by 40-45% by 2020 from 2005 levels. These targets have been subdivided into smaller targets for provinces across the country. Some of these provinces and cities have implemented cap-and-trade schemes as well. Some of the renewable energy projects being implemented may also be eligible to sell emissions mitigation instruments (offsets) to companies covered under the emissions trading schemes.