Ending months of uncertainty in the solar market, the Price Bureau of China’s National Development and Reform Commission (NDRC) announced the level of solar FIT payments for large-scale projects which will become effective from July 1, 2019.
For the ease of implementation, the country has been broadly categorized into three regions: Region 1, 2 and 3.
Region 1 FiT – RMB 0.40/kWh,
Region 2 FiT – RMB 0.45/kWh and for
Region 3 FiT – RMB 0.55/kWh.
These FiTs are inclusive of taxes.
Back in June of 2018, China shocked the global solar markets by imposing installation caps and a reduced feed-in tariff for solar projects in the country affecting solar demand in the country after which installations declined from 53 GW in 2017 to 44 GW in 2018. The change in policy is a result of a massive subsidy backlog of 120 billion yuan.
Now, it is expected that in coordination with the central government, local authorities will also conduct auctions and the results will enter a unified national bidding process from which China’s National Energy Administration (NEA), will eventually select the most competitive projects.
According to the notice by the Price Bureau, “FITs for so-called “village-level” poverty alleviation PV power projects have remained unchanged at RMB 0.65/kWh for Region 1, RMB 0.75/kWh for Region 2 and RMB 0.85/kWh for Region 3.
Commercial and Industrial (C&I) distributed solar PV power projects designed for “self-consumption + excess power feeding back into the grid” are subject to a FiT of RMB 0.10/kWh. However, distributed generation solar PV projects seeking a 100% feed-in mode of operation are subject to the same FiTs applied for centralized, ground-mounted systems.
The notice stipulates that these FITs, regardless of the type and operation mode, are for guidance for tariff levels at auctions.
Residential solar PV systems, for self-consumption + excess power fed into the grid, or 100% feed-in will be entitled to FiT of RMB 0.18/kWh and are included in the 2019 FIT subsidy budget.
According to an email communication by Frank Haugwitz, the director of Asia Europe Clean Energy (Solar) Advisory Co. Ltd (AECEA), since May 31, 2018, it took authorities 11 months to finally release the 2019 Solar PV FiT Policy, finally providing some visibility. These FiTs were already communicated early January this year and are considered the result of the on-going consultation between the government and industry stakeholders, he informed.
Frank further said that it raises questions regarding how the central government will deal with PV systems connected to the grid between July 1, 2018, and June 30, 2019, which amounts to an estimated 28-30 GW.
Stating that it is assumed that they will be included in the 2019 renewable energy subsidy catalog (RMB 2.25 billion), Frank raised a question, “But what might be the applied FiT”?
According to Frank, “AECEA expects that within the remaining weeks until the end of June, the NEA will release policies designed to address these and other several outstanding issues. During this period, the demand is expected to remain weak. However, an installation rush anticipated in Q3 and Q4 because by then, the NEA should have released the list of projects eligible for FiT support in the running year.”
Mercom recently reported that China installed 5.2 GW of solar PV capacity in the first quarter of 2019. When compared to Q1 2018, this was a nearly 40% decline in installation numbers in which China had installed 9.65 GW of solar PV capacity.
Moreover, China is prioritizing unsubsidized wind and solar projects. China’s NEA has organized and drafted a project report on promoting non-subsidized affordable projects for wind and solar power generation.
Image credit: Sterling and Wilson