Revised solar targets add pressure

Beijing has raised its target for solar farm installations on the mainland for the second time in seven months, a move that will challenge state-owned power distribution monopolies to build sufficient grid connections to meet the target, say analysts.

It also means greater financial support will be required from the state's China Development Bank, the main lender to solar power projects that require subsidies to be economically viable.

"If the government continues to raise the target, it would put more pressure on State Grid Corporation to provide the grid connections and for China Development Bank to provide the funding," said Michael Parker, a senior analyst at American brokerage SanfordC. Bernstein.

The mainland plans to install 14 gigawatts (GW) of solar power generating capacity this year, up from 12GW mentioned in a consultation paper sent to industry executives late last year.

It is also much higher than the 10GW target indicated by the State Council, China's cabinet, last July. At the time, Beijing also raised its installation target for 2015 to 35GW from 21GW set in January last year.

"With heavy subsidies announced by Beijing, grid connection is not necessary for such projects to become economic," Parker said. He said for solar farms in remote areas that need connections, State Grid has had four years to upgrade its infrastructure to better absorb wind and solar power.