China to subsidise solar power projects

BEIJING, July 23 - China's government says it will pay up to 70 per cent of the price of new solar power systems in an effort to speed up development of clean energy industries.The Finance Ministry's announcement on Tuesday comes as Beijing tries to reduce China's surging demand for imported oil and gas and create companies that cash in on growing global demand for clean energy technology.

The subsidies are meant to develop the solar industry as a new source of economic growth for the country, the ministry said.

It said that over the next two to three years, it will pay up to half of the price of solar power systems of more than 500 megawatts - comparable to a coal-fired power plant.

For independent photovoltaic power generating systems in remote regions that have no power supply, the subsidy will rise to 70 per cent, the ministry said in an announcement on its website.

Grid companies are required to buy all surplus electricity from solar projects that generate power primarily for the developers' own needs, at similar rates to benchmark on-grid tariffs set for coal-fired power generators.

To qualify for the subsidy, in addition to other requirements, each project must have a generating capacity of at least 300-kilowatt peak, construction will have to be completed in one year and operations will have to last for at least 20 years.

The total generating capacity in such pilot projects in each province in principle should not exceed 20 megawatts, the ministry said.

China has several large producers of solar systems based on photovoltaic cells that convert sunlight into electricity. But because of the technology's cost, most of their production is sold abroad.

The government has set a target of generating at least 15 per cent of China's power from solar, wind and other renewable sources by 2020. Officials have said such industries are growing so fast that the target might be raised.

The Finance Ministry gave no indication of whether the subsidies would be limited to Chinese companies or to equipment made in China.

The European Union Chamber of Commerce in China complained in May that European producers of wind turbines were shut out of a planned US$5 billion (RM17.5 billion) Chinese wind energy project.

Yesterday, the share prices of Chinese companies tied to renewable energy, such as Wuhan Linuo Solar Energy, jumped by the 10 per cent daily limit after Beijing announced the long-awaited subsidies for solar power projects.

Beijing's bid to boost the solar energy sector could draw more than US$10 billion in private funding for projects and put China on track to become a leading market for solar equipment in the next three years.

Several analysts warned, however, that the subsidy programme, although positive, would not lead to a near-term pickup in solar panel demand. The solar industry has suffered this year from a lack of available financing for renewable energy projects due to the financial crisis.

China and the United States are among the world's leading producers of greenhouse gases that scientists say trap the sun's heat and are changing the climate. - The Straits Times

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