The central government has laid out broad policy directions to support the development of the nascent domestic solar power market as part of efforts to help the troubled solar panels and components manufacturers boost sales in the face of overseas trade barriers.
The State Council said in a statement after a meeting Beijing would encourage mergers and acquisitions, the phasing out of outdated inefficient production capacity and installation of advanced production lines. It would tightly control the addition of new plants.
To relieve the bottleneck in renewable energy transmission, it will also facilitate the absorption of more solar power generation through better planning of power grid expansion and more stringent quality monitoring of key power transmission equipment.
The State Council also said Beijing planned to set subsidised solar power tariffs for solar farms, which will vary by regions depending on their solar resources. This mimics a tariff policy for wind farms. For solar panels on roof-tops, subsidies will be based on their power output.
The statement did not say when the subsidies will be issued or how they will be raised. Wind-power tariff subsidies are currently paid for by a levy on consumers' power bills.
Meanwhile, the Ministry of Finance said it had set aside 5.9 billion yuan (HK$7.3 billion) of subsidies for wind power generation and 723 million yuan for solar power generation this year.
Mainland producers of solar and wind power equipment are facing trade barriers overseas.
The United States on Tuesday slapped final duties on imported Chinese wind towers that are much higher than provisional ones handed down a few months ago to counter alleged below-cost sales and state subsidies. Mainland firms denied the claims.
The ruling came as Washington and Beijing began two days of talks on trade and economic affairs, after accusing each other's manufacturers of subsidising the exports of solar power equipment parts and materials.
Mainland wind-turbine and solar-power panel makers are enduring low profitability because of over-expansion of output capacity. The solar panel parts makers are particularly reliant on exports and are mired in steep losses. Sales growth slowed after debt-laden European nations cut subsidies for panel installation.
Shares of Hong Kong-listed mainland solar panel parts makers rose 6 to 17 per cent yesterday on speculation of new support policies. BOC International head of utilities research Peter Yao said the rally was more backed by sentiment than industry fundamentals, as the industry's fortunes are still governed by the difficult export market.