China considers significant solar PV FIT cuts for 2017

Still “unofficial and only a draft version”

© AECEA; Bild: Clenergy | solarserver.de

The stipulated FIT reduction for distributed solar PV in China came as a surprise © AECEA; Image: Clenergy | solarserver.de

China’s National Energy Administration (NEA) is aiming at significantly reducing FIT levels possibly effective 2017. Still “unofficial and only a draft version”, relevant information were disseminated via various Chinese media on September 29th, 2016.

The draft stipulates FIT levels for ground-mounted solar PV plants to be reduced from RMB 0.80 to 0.55 (USD 0.12 to 0.08, minus 37%) in region 1 (western provinces); RMB 0.65 instead of RMB 0.88 (USD 0.10 instead of USD 0.13, minus 25%) in region 2 (Beijing, Tianjin and certain districts in Qinghai, Xinjiang and Gansu); and a reduction from RMB 0.98 to 0.75 (USD 0.15 to 0.11, minus 23%) in Region 3 (eastern China).

A surprise is the reduction for distributed solar PV which until recently was considered to be favoured by NEA in light of the grid curtailment.

Distributed PV FIT’s should be reduced by 52% in region 1 (RMB 0.20 instead of RMB 0.42). A FIT reduction by 40% is scheduled for region 2, and a 28% decrease for region 3.

Record-low solar power bidding results in Abu Dhabi, Chile or Mexico may have been taken into account

Since recent domestic Top Runner tender results were significantly lower than existing FIT levels, this may be one of the possible reasons for new FIT cuts, comments Frank Haugwitz, Asia Europe Clean Energy (Solar) Advisory Co. Ltd. (AECEA).

Massive installations in 2016, lower FITs will lead to lower installations volumes in future. Recent record-low solar power bidding results in other parts of the world, notably Abu Dhabi, Chile, Mexico may have been taken into account.

To which extent technological advancements can off-set such reductions remains to be seen, hence significantly lower returns for developers are expected, says Haugwitz.

Overall, 2017 domestic demand is expected to significantly slow down Y/Y and both manufacturers and developers will have to look beyond Chinese border even more, Haugwitz concludes.

Source: AECEA | solarserver.de