China Announces Further RE Subsidies Cuts For 2020

• China has announced further cuts to its renewable energy subsidies for the year 2020, as compared to 2019, according to a Reuters report
• In 2020, it has approved a budget of RMB 5.67 billion, 30% down from last year as subsidy amount
• Solar PV has secured RMB 2.63 billion, wind power RMB 2.97 billion and biomass RMB 73.39 million under the 2020 subsidy allocation
• Distributed solar PV projects and those under Poverty Alleviation scheme in 11 regions will be eligible to stake claim to the subsidy amount
• Chinese solar PV association CPIA's general secretary Bohua Wang revealed during CSPV in Shanghai on Nov. 21 a lowered guidance from the association for the Chinese market for 2019, indicated that new installations could be even below 30 GW

The Chinese Ministry of Finance will be shelling out only RMB 5.67 billion ($806.5 million) to subsidize renewable energy for the year 2020, 30% less than the RMB 8.1 billion ($1.15 billion) approved for the industry in 2019, reported Reuters.

This announcement from the ministry is inspired by the continuous decline in manufacturing costs for renewable energy forcing large scale solar to compete on grid parity with conventional sources of power generation.

As per the report, eligible technologies to avail this subsidy will be wind farms, biomass power generators and distributed solar power operators. Solar power projects of the Poverty Alleviation scheme in 11 regions will continue be subsidised but large scale solar power plants will have to manage on their own.

Of this RMB 5.67 billion, solar projects will get RMB 2.63 billion ($373.7 million) as against RMB 3 billion approved for 2019. However, the ministry shortlisted 22.79 GW of large-scale and distributed generation solar power project capacity for RMB 1.7 billion subsidy, which needs to be disbursed once projects achieve grid connection (see Subsidy For 22.79 GW Chinese Solar Projects In 2019).

In 2020, wind power farms can claim RMB 2.97 billion ($422 million) and biomass RMB 73.39 million ($10.43 million) as part of their subsidy allocation. Subsidies for new onshore wind power projects will be stopped by the beginning of 2021.

According to the Reuters report, the ministry has a subsidy payment backlog of at least RMB 121 billion ($17.19 billion) which has restricted the cash flow of several companies.

During the first three quarters of 2019, China installed only around 16 GW of new solar PV capacity as the country struggles in its transition from FITs to subsidy-free solar projects. PV InfoLink expects the country to end with only 33.6 GW of new PV in 2019 (down from 44 GW in 2018) but believes the pace to pick up to 50 GW in 2020 (see China To Install 33.6 GW Solar In 2019). However, the report quotes an industry executive to say the market believes the number should be further down to 25 GW.

Speaking at the 15^th CSPV Power Conference in China, the General Secretary of Chinese PV Industry Association (CPIA), Bohua Wang said the association has lowered its expected PV installation numbers, which ranged in its earlier forecast between 45 GW for a higher scenario and 35 GW in a lower scenario. Now, CPIA showed that newly installed capacity in 2019 could be lower than 30 GW (see graph).