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China’s Solar Tariff Cut Likely To Boost Off-Grid Market

The recent decision by China’s National Development and Reform Commission to reduce feed-in tariffs for grid-connected solar power projects is expected to give a much needed boost to the distributed solar power market.

Recent media reports suggested that the National Development and Reform Commission (NDRC) is planning to reduce feed-in tariffs for grid-connected solar power projects by US$0.003 to US$0.02 per kWh. The new tariffs are expected to be implemented in early 2016. Projects that will be set up in the less populated western region of China will face higher cuts.

The move is expected to motivate project developers to focus more on distributed and off-grid solar power projects in the eastern provinces. The eastern provinces are the ones which have led China’s economic revolution and naturally have become the source of the majority of the country greenhouse gas emissions.

While project developers do favor setting up projects in the western provinces due to higher solar radiation and vast areas of unused land, transmitting the power generated from the western provinces to all around the country is a big headache. A large volume of power generated from the wind and solar power projects in the west is lost during transmission around the country.

To promote a more even distribution, reduce transmission loss, and encourage businesses and industries to invest in distributed solar power projects, this change in the tariff regime seems the right step.

 
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An avid follower of latest developments in the Indian renewable energy sector.

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