Solar subsidy plan can't ensure broad, even growth
The number of solar farm installations in the mainland's interior has surged since Beijing unveiled a tariff-based subsidy scheme favouring solar power in August.
However, analysts say the scheme is inadequate to ensure similarly rapid growth in coastal regions that have fewer hours of sun a day, compared to the arid and often cloudless inland regions.
Jiangsu province, home to some of the world's largest solar panel materials and components makers, was the first coastal province to launch a subsidy scheme to support the development of solar farms. That is part of Beijing's efforts to support component makers that were hit hard by the global financial crisis. But the 260 million yuan (HK$316 million) set aside last year for subsidising solar farm operations was all spent by August, and new project developments have since stalled, said Xu Ruilin, secretary general of the Jiangsu Photovoltaic Industry Association.
'We are in talks with the provincial government. We hope they will continue to allow solar farm operators to charge higher tariffs for their power. But so far there is no indication from them,' Xu said.
Beijing has allowed solar farm developers to charge 1.15 yuan per kilowatt-hour (kWh) of solar power output for projects approved before June 30 this year and built by the end of the year; and 1 yuan per kWh for those approved after June 30. This compares with 0.5 yuan per kWh for coal-fired power.
Ray Lian Rui, an analyst at industry consultancy Solarbuzz, expects the mainland's solar power generating capacity to surge from 0.5 gigawatts (GW) last year to 2 GW this year, 3 GW next year, and 6.3 GW in 2015, thanks to falling panel prices and the introduction of direct power price subsidies.
Many rainfall-rich southern coastal regions have fewer hours of sun than arid inland areas. Jiangsu has 2,300 hours of sunshine a year on average, compared to 2,700 hours in the northwestern Qinghai province, and 3,000 hours in Tibet.
But the coastal provinces are more developed and can afford to pay higher power prices. Solar farms there are also much closer to power consumption centres, saving costly long-distance distribution infrastructure and avoiding power grid bottlenecks that frequently plague the renewable power-rich northern and northwestern regions.
Xu said Beijing should consider giving varied tariffs for different regions, similar to those for wind power, so that the regions get a fairer chance of development.
'In the western and northern regions, we can't just look at the costs of generating renewable power, we also need to consider the costs to transmit it over long distances,' Xu said.
Also, regulations on project initiation, construction, grid connection, and inspection for solar farms are too cumbersome and most are modelled on rules for coal-fired power plants.
'We hope Beijing will tailor regulations for the wind power industry,' Xu said.