Prompted by falling costs for solar photovoltaic generation, China’s top economic planner is proposing to cut fixed subsidies and established feed-in tariff rates for utility-scale solar installations in the country, Renewable Energy World reports.
As of the new year, feed-in tariffs for new projects will drop by the equivalent of three to four U.S. cents per kilowatt hour, depending on the region. Subsidies will be slashed by between a quarter and half.
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“The magnitude of the proposed cuts is significantly higher than previous market estimates,” the outlet writes, prompting Zeng Shaojun, secretary general of the China New Energy Chamber of Commerce, to suggest “that the new scheme may have a major dampening effect on the future development of China’s PV sector.”
That may not trouble its government, which faces a “severe solar power generation surplus” in some parts of the country. Moreover, one renewable energy analyst told the outlet, the proposed cuts in subsidies and guaranteed tariffs merely track the falling cost of PV systems.
“Prices for the country’s upstream PV products have been on the decline since the beginning of the year,” REWorld reports, “and the associated construction cost is expected to drop by more than 15% year-on-year during 2016 and to further decline in 2017.” That means the cuts “should not significantly affect returns on quality projects and may, in fact, prove to be helpful for the long-term healthy development of the sector.”
