China confirms $435m solar subsidy budget for this year

The race is on to process applications for central payments across the world’s biggest solar market, particularly as qualifying projects must reportedly be grid connected this year. The final electricity price will be a major competitive factor considered by the Beijing authorities.

Will the NEA be able allocate subsidies in time to ensure 40 GW of new solar capacity arrives in China this year?

Image: NASA Goddard Space Flight Center/Flickr, (cropped in to China).

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China’s National Energy Administration (NEA) yesterday confirmed RMB3 billion ($435 million) will be allocated for public solar subsidies this year, according to a report by Reuters.

The news agency yesterday reported the NEA had confirmed the details it published in a consultation document about subsidized PV project policy on April 11 would be adopted as official policy.

That draft document, which emerged during prolonged talks between the central authorities and solar industry stakeholders in Beijing, stated RMB750 million of the RMB3 billion would be allocated for rooftop projects, amounting to 3.5 GW of new capacity.

If true, confirmation of the official policy by the NEA would remove any lingering fears the RMB3 billion might have been spread over a longer period as Beijing attempts to pay down what Reuters estimates is a RMB120 billion backlog in overdue solar subsidy payments.

The subsidies will be allocated by the NEA after applicants register details with the provincial authorities, with Reuters reporting all applications must be received by July 1.

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Subsidy competition

The NEA confirmed on its website yesterday that in allocating subsidies it will “regard the on-grid electricity price as an important competitive condition giving priority to the construction of projects with low subsidy intensity and [a] strong declining slope”. Consideration will also be given to the condition of the local power networks to accommodate new solar projects and the local investment environment, added the NEA.

The Reuters report stated all projects eligible for subsidies must be completed this year. If true, that would indicate a tightening up from April’s draft proposal, which allowed six months’ leniency, albeit with subsidies falling by RMB0.01 per installed kilowatt of capacity for each month’s delay.

The timing of the process may also cast doubt on China’s ability to add 40 GW of new capacity this year. Roth Capital Partners suggested in April that such a landmark could only be reached if the NEA were able to allocate and publish the details of subsidy grants by the end of next month. With applicants reportedly given until July 1 to apply, that timescale appears impossible.

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