Chinese Solar Industry Expected to Become Subsidy-free by 2021

Industry insiders believe China’s solar industry will become
subsidy-free in a few years as the country tries to revitalize its
photovoltaic sector after the government announced a plan to scale back
its central subsidy system last year.

China’s solar industry is
expected to transition toward a subsidy-free market as early as 2021,
said a new analysis of China’s solar industry published by Asia Europe
Clean Energy (Solar) Advisory.

The Chinese government has outlined
a series of policies this year, looking to remove the hurdles that have
been preventing the escalation of subsidy-free photovoltaic projects in
the world’s biggest solar power market.

China’s National Energy
Administration announced plans in April to drive the development of new
subsidy-free solar projects through policy support, hoping new projects
will be developed without the need for governmental subsidies, which it
is believed will steer the market in a new direction toward zero-subsidy
renewables.

According to the NEA, subsidy-free pilot projects
commissioned by 2020 can enjoy 20-year power purchase agreements with
fixed prices and top dispatch priority, guaranteed by grid companies.

“Such
projects would bear lower cash flow risks compared to the normal ones,”
said Liu Yujing, an analyst with Bloomberg New Energy Finance.

“With
the subsidy-free pilots and the still pending subsidy program, China
may have at least 40 gW of new photovoltaic installation per year during
2019 and 2020,” Liu said.

With the production output figures of the world’s biggest solar manufacturers booming on demand outside China, together with the technological innovations that have also been speeding up the cost reduction of renewable energy, the China Photovoltaic Industry Association has an optimistic outlook for this year.

SOURCE: China Daily

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