China Combats Solar Downturn With Subsidy

March 31, 2009

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The Chinese Ministry of Finance announced a new subsidy for solar installations that is expected to help the industry recover from recent price drops, according to Cleantech Group LLC.

Aimed at relatively large installations of 50 kilowatts or greater, the cash grant of RMB 20 ($2.90) per watt would apply to solar photovoltaic (PV) installations in China to encourage the adoption of solar technology in rural and urban markets. The Ministry of Finance has not yet established a limit on the total subsidy, but analysts predict it could be capped at about 180 megawatts, according to Cleantech.

Cleantech also reported that the solar installations in China must meet energy conversion efficiency guidelines: 16 percent for mono-crystalline-based PV modules, 14 percent for multi-crystalline-based PV modules, and 6 percent for amorphous silicon-based PV modules.

China had about 100 megawatts (MW) of installed capacity in solar at the end of 2007, with 47 MW added in 2008. The new subsidy represents a 48 percent decrease in the average cost for an installed watt worldwide of about $6.50, said Cleantech.

Ian Tharp, an analyst at Dundee Capital Markets, told Cleantech that Chinese-based solar companies such as LDK Solar, Renesola, Canadian Solar, Trina Solar, JA Solar Holding, China Sunergy, Suntech Power, Solarfun Power and Yingli Green Energy could be the biggest winners.

In January 2009, China Technology Development Group Corp. and Qinghai New Energy Group announced plans to build a 30-megawatt on-grid solar power station in Qaidam Basin of northwestern China. The project has a long-term target of 1 gigawatt of capacity, which could make it the biggest photovoltaic project in the world.

According to Ernst & Young’s Venture Insights, China increased its cleantech venture capital investment from $30 million in 2007 to $84 million in the first half of 2008.

President Obama’s stimulus proposal contained about $13.9 billion to subsidize loans for renewable energy projects, including solar.

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