China announces FIT

Rates of around one Renminbi (rmb) per kilowatt hour (US$.156/kWh) will be paid, and while there is no cap limit, projects are subject to NDRC approval, the process for which is unclear. The FIT rates are scheduled to change, as photovoltaic system costs decline and an intital rate of 1.15 rmb/kWh will be paid for projects approved before July 1, 2011 and completed by the end of the year. The program will be funded from the Renewable Energy Development Fund.

Market analysts Jefferies have predicted Chinese solar demand of two gigawatt (GW) in 2012 expanding to five GW. Yingli, JA Solar, Suntech and Trina are all seen as major beneficiaries of the scheme. Existing FIT rates in China range from 0.25-0.50 rmb/kWh so these new rates make for a significant increase.

FIT rate dates

The cutoff date for the first FIT rate is before this announcement, yet Jefferies say it is not surprised by this. In reality, it says, the NDRC has been working on the national FIT for some years and there are roughly 500 to 600 MW of projects approved by the NDRC and local equivalents. Jefferies also says it could revise its one GW forecast for Chinese installed capacity for 2011.

Developers show interest

Jefferies have observed three major project developers opening in China including Wirsol and IBC. Both are customers of Yingli. The analysts believe other developers are evaluating Chinese projects at present.

Dirk Morbitzer, managing director of Renewable Analytics says that this is something that he has been expecting. He says that the FITs have been under discussion for months and now finally have been set.

With renewable energy incentives in place, high levels of sun irradiance in the North West and South of China and low installed photovoltaic costs (approximately $2/W), Jefferies predicts that China could become one of the top photovoltaic markets. It also believes that the FIT program is the cornerstone on which a goal of 10GW of installed capacity by 2015 and 40-50GW by 2020 could be achieved.