China has set its first national feed-in tariff rates for solar power projects beyond those put up for tender under the country’s previous solar solicitations. China first used a feed-in tariff scheme in 2009 when it announced an open bidding process for a 10-megawatt solar photovoltaic project in Dunhuang city, Gansu Province.
That year, the final feed-in tariff rate was set at 1.09 yuan per kilowatt-hour, won by China Guangdong Nuclear, Enfinity and Best Solar in the bidding.
In 2010, the Chinese government initiated a second round of concession bids for 13 large-scale PV projects for a total of 280 MW. Tariffs bids were as low as 0.73 yuan and winning bids were 0.85 yuan/kWh on average.
The new national tariff rates, above those offered in 2009 and 2010, will now apply to solar projects in China falling within specified periods. The rates start at 1 yuan ($0.16) per kilowatt-hour for projects approved after July 1.
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Projects approved before July 1 and completed by the end of this year will get 1.15 yuan/kWh, the National Development and Reform Commission said in a statement published on Monday.
For projects approved before July 1 but would not be completed by yearend, the tariff price set was 1 yuan/kWh.
Projects in Tibet will continue to receive 1.15 yuan/kWh, regardless of when they were approved or built.
The new tariff rates will apply only to solar projects that are not awarded through a competitive bidding process. The price for solar projects approved through the concessionary bidding will still follow rates stipulated in the bidding documents.
The government, however, has yet to provide more details on how the tariff scheme works, including the specific sizes of projects eligible for the rates, or domestic content requirements found in previous tenders.
Chinese solar companies
Jesse Pichel, an analyst for Jefferies & Co., a New York-based securities and investment banking group, said China’s unified subsidy rates could boost the fortunes of Chinese solar companies like Yingli Green Energy, JA Solar, Suntech Power Holdings and Trina Solar.
Mr. Pichel estimates that the feed-in tariff scheme should boost the rate of return on solar installations to “high single digits.»
China’s demand for solar power may reach 2 gigawatts this year and rise to 5 GW in coming years, Mr. Pichel said.
Shares of companies such as Yingli fell 2.19 percent in the August 2 close in New York and JA Solar went down by 2.63 percent from Tuesday at $4.81 in Nasdaq. Suntech is also off by 1.76 percent, at $7.24 and Trina down by 1.36 percent, at $18.11 all when trading closed Tuesday in New York.
