The Chinese government has clarified that the decision to withdraw subsidy support for solar PV installations will not be withdrawn. Pictured here is the Tianfu Square in Chengdu, Sichuan in China (Photo Credit: Mr Sun/www.goodfreephotos.com)
- GTM Research expects solar power installation spree in China during 2018 to slow down to 28.8 GW, as against earlier guidance of 48 GW
- Subsidy dues that the Chinese government owes to the solar power developers is likely to reach 250 billion RMB ($39 billion) by 2020, according to GTM parent company Wood Mackenzie
- China's subsidy cuts will lead to module prices coming down globally to the benefit of developers outside China
The recent subsidy cuts announced by the Chinese government will impact the rest of the solar world. However, GTM Research believes the impact will be short term. It has lowered its forecast for the country in 2018 to 28.8 GW of new PV capacity, as compared to 48 GW given earlier. Its parent company Wood Mackenzie, which earlier expected 50 GW of installations in the world’s largest PV market, now projects only 30 GW.
IHS Markit has already lowered its installation forecast for China to 38 GW in 2018, down from 53 GW provided earlier (see Chinese Policy Change Impacts Global PV Market Sentiment).
The announcement by China was followed by some big companies including Canadian Solar approaching the government to delay the decision. But, the government is sticking to its decision, according to the country’s news agency Xinhua. The step to cut subsidies will help the country focus on quality ease the financial burden on the government, reported Reuters referring to Xinhua.
China provided very high feed-in tariffs that propelled a boom beyond the government’s expectations. But so far China has not cleared up the dues it owes for these installations. It runs in billions. Wood Mackenzie says the subsidy costs that the government owes to power plant operators may reach 250 billion RMB ($39 billion) by 2020.
Developers elsewhere will benefit from production sudden overcapacities, which will lead to strong drops in module prices, that will be reflected in lower bids for tenders as well.
Benjamin Attia of GTM Research expects record-low solar bids to dip below $20 per MWh in the next 12 months. These changes will lead to higher PV penetration in newer markets.