Monday, November 16, 2009

China Selects 294 PV Projects for Golden Sun Subsidy

China has chosen solar projects totalling 642 megawatts to benefit from its Golden Sun subsidy, first announced in July. Roughly half the generation capacity will come from utility-scale solar parks, while the other half will be attached to existing industrial sites.

The government has not provided the names or locations of the projects. But it appears that many of the Golden Sun programme’s potential shortfalls have been borne out.

One of the most burdensome restrictions the Chinese government placed on the scheme was that no more than 20 megawatts (MW) could be built in any one province, hampering developers’ ability to amass economies of scale.

Given China’s 34 provinces, the programme’s theoretical limit was 680MW. As it turns out, Golden Sun will subsidise projects totalling 642MW at a total estimated cost of 20bn yuan ($2.9bn).

Golden Sun will cover:

  • 232 projects -- totalling 290MW -- to be built at major industrial sites where carbon-heavy manufacturers will consume all of the electricity generated.
  • 35 projects -- totalling 306MW -- to be built as utility-scale solar parks, whose output will be flowed into China’s transmission grid.
  • 27 projects -- totalling 46MW -- to be built by independent producers in remote, powerless regions.

China's Ministry of Finance will foot half the bill – including any needed transmission and distribution infrastructure – for utility-scale projects and those going up at industrial sites. It will pay 70% of the cost of building off-grid projects in remote regions. All of the projects are expected to be operational within three years.

The Golden Sun programme was initially hailed by analysts as a way to ignite domestic demand at a time when many Chinese solar firms faced horrific inventory overhangs. Many of them, including JA Solar and Yingli Green Energy, have since seen strong rebounds as falling panel prices spur record-high sales.

But analysts have since taken a frostier attitude towards Golden Sun, concluding that it will do little to stoke permanent demand in the Chinese market without the addition of a feed-in tariff (FIT).

A number of Chinese executives, including SunTech chairman Zhengrong Shi, have gone on the record predicting a general solar FIT will be in place in China by the end of the year. Several major companies, including Yingli, Canadian Solar and LDK Solar, have announced large-scale solar projects that appear at least partially reliant on such a FIT.

However, reports now indicate that the Chinese government could eat up another two or more years hammering out the details of the FIT, and will attempt to plug the interim gap with a variety of smaller, more targeted subsidy programmes.

See the original article here

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