China Readying National Solar Subsidy Program
China is readying its national solar subsidy program eight months after it was effectively shunted aside after the Central Government announced its plans to cap new solar projects, and reports suggest a quota of 3 gigawatts (GW) is being planned.
Several reports this week have pointed to China’s National Energy Administration (NEA) restarting its shuttered solar subsidy program for both utility-scale and distributed/residential solar sectors, with a source telling pv magazine that the agency is considering a quota of 3 GW for 2019. Accordingly, if this is accurate — and, at the moment, this is just an unconfirmed rumor awaiting the final policy document — this would equate to around 600,000 household systems qualifying for a subsidy which could be set at CNY0.18/kWh ($0.027) for 2019.
“However,” said Frank Haugwitz, Director of the Asia Europe Clean Energy (Solar) Advisory (AECEA), “to my knowledge, this support policy is still subject to negotiations, nothing official yet. Hopes are high that the official version will be released before CNY.”
Yvonne Liu, senior China solar and distributed energy analyst with Bloomberg New Energy Finance, similarly warned caution about the reported 3 GW figure, explaining that this is something that will definitely happen in 2019, but the specifics have yet to be ironed out.
“The Chinese governments have been pushing the industry to explore subsidy-free projects, as well as maintaining the subsidy programme, while the cut on scale and $/kWh seem to be faster than previous pattern,” Yvonne Liu said. “It implies a fact that the government has not found solutions to solve the subsidy deficit problem, but still want to maintain a certain domestic demand for the industry. 2019-21 will be a transition period where the subsidy-free market will continue to grow and gradually replace the subsidized market.”
The news will provide the Chinese solar industry with the confidence they need to drive forward this year — alongside the Central Government’s recent plans to deliver subsidy-free renewable energy projects — and is expected to be confirmed before Chinese New Year. This will result in two types of markets — one which will be subsidized and another which will not be subsidized. “Basically, in my view,” said Frank Haugwitz, “the remaining two years of the ongoing 13th Five Year Plan, China’s solar PV market is in a transition from a previously entirely subsidized to now two markets (with/without subsidies) towards an entirely non-subsidized PV market, possibly starting from Jan 2021 onwards.”
The new subsidy program will not be the only stream of solar projects as, in addition to the non-subsidized/grid-parity projects the Central Government is hoping to encourage, there are the country’s Top-runner and PV for poverty alleviation projects.
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