China’s new feed-in tariff has led to a significant increase in downstream activity, according to the Solarbuzz China Deal Tracker. The subsidy scheme, which was launched in July, has already created a non-residential project pipeline of 14GW, with over 1,000 systems either installed or in the development stage.
The majority of this activity is taking place in China’s northwest region, which is blessed with high irradiance levels and vast expanses of fallow land. This region currently accounts for 66% the country’s total pipeline; the top five provinces are Qinghai, Gansu, Ningxia, Inner Mongolia and Sichuan.
Utility-scale projects take up the largest proportion of the market – 1MW systems account for 707 of the projects monitored by Solarbuzz – and this trend has created a lot of business for developers and engineering, procurement and construction companies. Most leading development groups are state-owned enterprises and the top 10 of these companies contribute 9.7GW towards the total pipeline.
Helping entice further investment in the downstream sector has been this year’s collapse in factory-gate module prices. This factor, in unison with the CNY1.15/kWh tariff, has enabled projects to provide reasonable internal rates of return – installed system prices for ground-mounted projects above 10MW are now below CNY15 per W and falling.
“The earlier-than-expected release of the national PV FiT policy has opened the door to explosive growth in project development activities in China,” said Solarbuzz analyst Ray Lian. “The result is more tenders and an acceleration of PV orders. In 2011, the PV market in China will exceed 1.6GW, representing over 230% growth from 2010.”
