China’s National Development and Reform Commission (NDRC) announced this week that it will cut the amount of money it pays to developers of solar farms by as much as 19% next year in order to reflect falling construction costs for solar.
The proposals will also apply to wind farms, with a cut of 15% expected in 2018 based on current tariffs.
According to the NDRC, this reduction in subsidies will save the government around 6 billion yuan ($863 million) a year. With the price of solar modules falling by around 30% in 2016, developers have been offering record-low bids for solar in many parts of China, and hence a reduction in the support offered by the NDRC was always a possibility.
China also recently announced that it is to lower its 2020 solar installation target from 150 GW to a minimum of 105 GW in the wake of a massive oversupply of modules and increasing rates of curtailment of solar power in some regions.
The NDRC will continue to encourage local authorities to select renewable energy developers at auctions, however, in a concerted effort to drive down the cost of solar and wind power further.