China has given its domestic solar market a boost with a substantial government subsidy programme for new solar power installations.
Under the umbrella of China’s Renewable Energy Law and aimed at “accelerating solar PV technology in the field of urban and rural architecture”, the Ministry of Finance and the Ministry of Housing and Rural-Urban Development will offer subsidies of RMB20/W (US$2.93/W) for qualifying projects. At first glance, the subsidy would bring feed-in electricity prices from solar projects closer to coal-fired electricity prices, at least for the duration of the incentive programme.
According to the government policy statement, the programme has three key aims: to strengthen the financing and capital efficiency of solar projects; to gain a critical mass of projects such that technical standards may be established in China; and to create an environment where PV and solar projects are integrated with other technologies and building services.
If successful, the policy will forge closer links between real estate developers, architects, energy service companies and the solar industry, bringing solar technology further upstream within the building sector.
The subsidy programme is designed at larger-scale advanced efficiency solar installations. Qualifying projects must be over 50kW, and priority will be given to projects which integrate the solar technology within the building.
The government also says priority will be given to grid-type architecture projects; and for public building projects (schools, hospitals, government agencies, tourist buildings for example). Given China’s public buildings account for only 3-4% of building square-footage but 22% of building energy usage, the subsidy programme could have a significant impact on China’s fossil fuel use.
Within the priorities outlined by the government, solar cell efficiency will be the qualifying benchmark. For silicon photovoltaic products, the efficiency should be more than 16%; for polycrystalline silicon PV products, more than 14% and amorphous silicon PV products more than 6%.
These minimum technological standards are in-line with advanced commercial solar cells available from world-leading (and mostly Chinese) solar companies.
Meanwhile, the potential benefits of smaller solar installations will remain out of reach for most Chinese households. According to ReneSola chief financial officer Charles Bai, with an installation price of US$2.50/W, a 2kW home system will cost “roughly four times the average household income in China and more than the price of a typical family house in many parts of the country”.
“As a result, we expect most of the solar installations initially at large commercial and industrial facilities,” says Bai, in a ReneSola report into the Chinese solar market.
Writing before the subsidy announcement, Bai was upbeat for China’s prospects – solar already accounts for 1% of China’s total electricity generation capacity, he says, and solar panel installation is growing at a rate of 10 million sqm every year. “The solar thermal boom has come in the absence of any government incentives,” concludes Bai, writing before the subsidy.
The government incentives, in the form of the new Renewable Energy Law subsidy, are perhaps as much to address the fortunes of China’s domestic solar manufacturers and suppliers as the use of renewable energy. Solar is the darling of China’s economic reforms, with China becoming a world-leader in technology, manufacturing and commissioned solar capacity in less than a decade – the government will be keen to support the business through the after-effects of the global recession.