Chinese subsidy backlog ‘leaves solar projects facing bankruptcy’
Rapid growth in the sector causes finance ministry to struggle to keep up with payments to help renewable energy compete with cheaper coal
Solar power projects in the northwest Chinese region of Ningxia are struggling to maintain operations and face “bankruptcy risks” because of long subsidy payment delays, according to an investigation by regulators.
The warning follows rapid growth in China’s solar sector, which has led to a subsidy backlog of 120 billion yuan (US$17.4 billion), with prices for solar power varying wildly from region to region.
China wants to bring down renewable energy costs to allow wind and solar projects to compete subsidy-free with coal-fired power. It has already capped the number of new projects this year in a bid to ease its subsidy burden and help the sector focus on efficient supply.
The National Energy Administration’s bureau in charge of northwest China said the payment backlog had forced many projects in Ningxia Hui autonomous region to take high-interest loans to stay afloat, with some unable to afford basic maintenance.
Government-approved solar projects are entitled to a subsidy for each kilowatt-hour they sell to the grid, but the surge in new capacity has left the finance ministry struggling to make the payments on time.