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Chinese feed-in tariff has potential, but details lacking

The Chinese feed-in tariff could give a major boost to the solar industry increasing installations by a combined 1.5 GW in 2011 and 2012, but the devil is in the details, says IHS iSuppli.

By Kari Williamson

“The Chinese Government’s release of its nationwide FiT is sending a very positive signal to the country’s solar industry – a signal that ultimately will increase PV installations by huge margins during 2011 and 2012,” says Glenn Gu, Senior Analyst for solar photovoltaics (PV) at IHS.

“The establishment of the FiT has increased the confidence level among players in the China PV supply chain by guaranteeing the return on investment for many existing solar projects. PV companies are expected to take full advantage of the policy to accelerate the construction of solar projects and increase investments in future endeavours.”

However, IHS iSuppli says the documentation “seems too simple” and that it fails to address fundamental questions.

Unanswered points include:

  • The documentation fails to mention the subsidy period;
  • Only a signal feed-in tariff rate is offered for all solar PV projects regardless of region and installation method;
  • The subsidy capital may not be enough to sufficiently fund all solar PV installations;
  • The capital for the feed-in tariff is said to come from a Renewable Energy Tariff account, but the account has suffered a deficit since 2010 and this is expected to widen in 2011. IHS iSuppli expects the deficit to remain until 2014 as the majority of the capital will be used to subsidise other renewable energy projects such as wind and biomass; and
  • It does not address grid connection issues.

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Photovoltaics (PV)  •  Policy, investment and markets