China auction allocates subsidies for 22.7 GW of solar with lowest bid of $0.0407/kWh

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China’s National Energy Administration (NEA) approved 3,921 PV power projects with a total generation capacity of 22.78 GW in the country’s first solar energy auction.

Germany consultancy the Asia Europe Clean Energy (Solar) Advisory (AECEA) this morning reported the NEA had pre-selected 4,338 projects with a combined capacity of 24.55 GW for the procurement, with 1.77 GW worth of projects missing out on a public subsidy. Of the approved projects, 366 facilities with a combined capacity of 18.12 GW were large scale solar plants. The remaining 4.66 GW was represented by 3,555 distributed generation projects.

Approved price bids for the solar power generated ranged from RMB0.2795/kWh ($0.0407) to RMB 0.5500, depending on system size, with an average price of RMB0.3281. The lowest bid was for a 100 MW project in the Ningxia autonomous region, the highest for a 24 kW array in the Chongqing municipality.

Price penalty

Selected projects must be grid connected by the end of June and any projects completed after this year will suffer a price tariff reduction of RMB0.01 per quarter. “If projects shall be connected after December 31, 2019, [the] approved feed-in-tariff shall be revoked and projects eventually cancelled altogether,” the AECEA reported.

The region with the largest share of approved projects after the NEA announced the results on Wednesday was Guizhou province, with around 3.6 GW, followed by Shaanxi province with 3 GW. Another 13 unspecified regions secured more than 1 GW of generation capacity each. “Gansu province and Xinjiang autonomous region were not allowed to participate, due to the prevailing grid curtailment,” said the AECEA.

AECEA also highlighted the disproportionately large amount of large scale projects approved in the exercise, with almost 80% of the allocated capacity awarded to solar parks. Last year, utility scale and distributed generation facilities claimed shares of 23.3 GW and 20.96 GW, respectively. “Given the 2019 results, it therefore appears that the single most important evaluation criteria was the feed-in-tariff submitted by the developers,” AECEA stated, adding bigger projects benefit from economies of scale which enable developers to offer lower final price bids.

Outlook revised up

As a result of the auction, the AECEA revised up its guidance for Chinese solar this year from 32-34 GW to 38-42 GW. That compares with the 44.26 GW installed last year.

According to the latest statistics released by China’s National Renewable Energy Centre, the country saw the addition of approximately 7.61 GW of new solar generation capacity between January and May, with cumulative capacity reaching 182.07 GW. That means if the AECEA projections prove accurate, China will see its largest end-of-year rally from now onwards.