• China’s CPIA says the Chinese government could introduce a competitive reverse auction-based system to once again allow utility scale solar power development
  • It may also make commercial and industrial distributed generation segment to compete for state subsidies
  • Initial amount of the state subsidy for solar project development will be RMB 3 billion ($448 million) in 2019
  • Analysts from Roth Capital expect the RMB 3 billion is good enough for 25 GW and that total China market demand will be 50 GW in 2019

In January 2019, the federal government of China confirmed an end to its feed-in-tariff (FIT) program for large scale solar and wind power capacity, while allowing its provincial governments to promote subsidized wind and solar power projects (see Beijing Announces Solar Support Measures).

Now, all eyes in the global solar world are on China as the country considers several more policy changes to its solar program. After stopping state financial support for large scale solar power development on May 31, 2018 dubbed as 531 Policy, China’s administration is preparing a move to a reverse auction-based subsidy scheme which would once again encourage utility scale solar project development – but at lower cost and in a more controlled manner.

Analysts at Roth Capital Partners refer to a press release on the subject issued by the China Photovoltaic Industry Association (CPIA), saying that the government is thinking of having a fixed amount of subsidy for solar project development with an  initial amount being RMB 3 billion ($448 million) in 2019. To compete for this state support, along with utility scale solar, commercial and industrial (C&I) distributed generation projects too could be made to participate in the reverse auction tender mechanism.

Tenders would be allotted on first come, first serve basis as projects will be required to meet the National Energy Administration’s (NEA) subsidy standards. Project completion dates would need to be strictly followed. Provincial governments would be made to consolidate applications received for projects, but the final decision would be the prerogative of the federal government.

Even for residential solar systems, plans are being made to have a separate subsidy limit, reported Bloomberg adding that projects that were not eligible for state funding after the shutdown last year, may apply for quotas in 2019.

Roth has strongly upped its China forecast and now expects the country to add an impressive level of 50 GW of new solar capacity in 2019, a level that is quite a bit higher than the 44 GW in 2018 (see China Installed 44 GW Solar PV In 2018: NEA) and close to the record 53 GW in 2017.

The 50 GW are based on 10 GW of grid parity projects (comprising mostly utility-scale and C&I DG projects), 8 GW of PV poverty alleviation (PVPA) projects and 7 GW of unfinished 2018 projects coming to fruition in 2019. Another 25 GW would be realized with the newly announced subsidy of RMB 3 billion.

Earlier in February 2019, Reuters said China has barred new solar power development in Far Western Gansu, Xinjiang and Tibet regions fearing overcapacity (see More Solar Power Curtailment In China).