The Chinese government’s new feed-in-tariff (FiT) has the potential to increase solar installations in the country by 1.5GW in the next 18 months, according to a new IHS iSuppli report.
Previous forecasts suggested that PV installations in China would total 1GW in 2011 and 1.4GW in 2012. However, the introduction of China’s first solar subsidy programme could inspire these figures to rise by up to 50% in 2011 and 71% in 2012, seeing 1.5GW and 2.4GW installed respectively. China’s National Development and Reform Committee (NDRC) unveiled China’s FiT on July 24.
“The Chinese government’s release of its nationwide FiT is sending a very positive signal to the country’s solar industry – a signal that ultimately will increase PV installations by huge margins during 2011 and 2012,” said Glenn Gu, senior analyst for photovoltaics at IHS. “The establishment of the FiT has increased the confidence level among players in the China PV supply chain by guaranteeing the return on investment for many existing solar projects. PV companies are expected to take full advantage of the policy to accelerate the construction of solar projects and increase investments in future endeavours.”
Although the introduction of subsidies for installations is encouraging, several unanswered questions remain. Firstly, the bill as it stands does not mention the length of subsidy period. Secondly, only a single tariff rate is offered for all projects, regardless of region or installations method. Finally, the document fails to address the issue of grid connection issue, namely preparing China’s grid infrastructure for the inevitable influx of new solar projects enticed by the subsidies available.
The ability of China’s publicly-funded Renewable Energy Tariff (RET) to finance a solar specific tariff scheme is also doubtful. Not only is the RET in deficit, but it is also charged with bankrolling all the country’s other renewable energy projects.