Only days after China’s National Development and Reform Commission set up a new feed-in-tariff (FiT) for PV project tenders, worries have already arisen about its financial viability for some PV companies.
The solar radiation in western China, which is 5519.46MJ/m2, is higher than that of 4836.23MJ/m2 in eastern China. Sicheng Wang, researcher from the Energy Research Institute of NDRC noted that, after counting into government subsidies, operation costs, utilization rates in different provinces, VAT, loans, corporate income taxes, surtaxes and interests, if the IRR is set at 8% and the investment return time at 15 years (both at the average levels of the industry), CNY1 (US$0.16) per kilowatt-hour could only profit four out of nine western provinces, while all 17 eastern provinces are likely to suffer losses at that price.
Many eastern provinces are about to introduce a local FiT to help local projects, and Yun Ling, the deputy director of Zhejiang Economic and Information Technology Commission, said last week that Zhejiang province is to set the provincial FiT at the price of CNY1.43 (US$0.22) per kilowatt-hour, which is currently reported to the NDRC for approval.
The difference between CNY1.00 and CNY1.43 will be funded by local government finance.