Subsidy delays in China harming PV industry, says Trina Solar

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Trina Solar, a vertically integrated Tier-1 Chinese solar company, has revealed in an interview with Bloomberg that ongoing delays in receiving solar subsidies are serving to hurt the Chinese PV industry.

According to Trina’s chief financial officer Teresa Tan, delays in receiving subsidy from the government now exceed 12 months, creating a mismatch of uncertainty that threatens the development of the domestic solar sector.

Developers of both solar PV and wind energy projects have also complained of receiving far less in subsidy than they originally calculated because of a disconnect between agreed incentive rates and retroactive surcharges that are levied on the bills that fund the subsidy.

Should these two problems persist, Tan said, then China’s ambitions to install 18 GW of solar PV capacity this year could be seriously undermined, and will store up further trouble in 2016 and beyond.

An report by the Chinese government’s National Center for Climate Change Strategy and International Cooperation revealed that the subsidy shortfall amounts to approximately $4.7 billion in unpaid bills.

Many leading solar companies dependent upon the Chinese solar market – including Yingli Solar – have experienced acute financial difficulties in 2015, in part owing to these subsidy payment delays. Trina’s Tan told Bloomberg that the company is on course to add 800 MW of new PV capacity in 2015, indicating that the company has found a way to cope with these delays following two years of losses between 2012-13.

China’s National Energy Administration (NEA) has set a solar PV installation target of 100 GW by 2020, and the government – both central and regional – has given assurances that a sustained subsidy program will support this aim, triggering massive investment by Trina, JinkoSolar and Yingli in China’s downstream sector – strategies that have served to widen revenue streams but leaves these companies vulnerable to subsidy delays.

According to Tan, investment for 200 MW of Trina’s downstream operations came via funding raised in the U.S. capital market, and the delays in subsidy payment have already spooked these investors, making further financing "nonviable", she told Bloomberg.

"There’s a sharp turn in bankers’ attitude to our industry," Tan said. "From throwing money at everyone to completely tightening their purse string, to now differentiating among players in this sector – a welcoming trend no doubt."

Tan also warned that no other investment in China’s solar industry would be forthcoming if the subsidy delays were not addressed over the coming months.