China sets lower solar FIT rates for 2018

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Utility-scale PV projects that are located in China’s Class 1 solar resource region will qualify for a new FIT rate of CNY 0.55/kWh, said the National Development and Reform Commission (NDRC) this week. Installations in the country’s Class 2 and 3 regions will be eligible for revised FIT rates of CNY 0.65/kWh and CNY 0.75/kWh, respectively.

The NDRC said that the new rate for distributed-generation (DG) solar projects will be CNY 0.37/kWh, which is about CNY 0.05/kWh lower than the current rate. However, the FIT rate will remain the same for all solar projects built under the Chinese government’s program to alleviate poverty in rural areas, at CNY 0.42/kWh.

Frank Haugwitz, director of Asia Europe Clean Energy (Solar) Advisory (AECEA), says the new FITs are “better than anticipated.” The new rates are on average between 12% and 15% lower than the current rates for utility-scale PV projects. AECEA had initially expected an average reduction of between 18% and 20%.

The NDRC also said it would reduce on-grid tariffs in some parts of the country, in line with declining costs and technological improvements. For PV projects approved by the end of this year, developers will be able to qualify for the government’s current FIT rates if they complete their installations before June 30, 2018.

China built roughly 43 GW of solar capacity in the first nine months of this year, up sharply from the 34.5 GW that was installed in all of 2016, according to Bloomberg New Energy Finance (BNEF). Last month, BNEF said that the country may be on track to install up to 54 GW of PV in 2017.

China’s cumulative solar capacity stood at 77.8 GW at the end of 2016, according to the International Renewable Energy Agency (IRENA). However, the Chinese government’s official 2020 installation target of 105 GW remains in place.

Earlier this week, the National Energy Administration (NEA), an entity under the NDRC, revealed plans to monitor solar projects. The new program is designed to help shift investment away from parts of the country where solar curtailment is a problem.