Chinese Subsidy for Solar Industry

published: 2011-05-19 17:01 | editor: | category: Knowledge

Subsidies in Europe and America are to encourage the use of solar energy in spite of the maker. Some western companies complain that Chinese subsidy policy is just there to help domestic manufacturers.

According to an anonymous source close to government leader in Beijing, the government is considering a project that will invest as much as 1500 billion dollars to support various emerging industries including the renewable energy industry.

Every single solar company in the world depends on some kind of subsidy to make or sell solar products. This is because the cost of solar generated power is 8 times higher than that of coal. Actually, solar industry started when countries released subsidy policies to reduce carbon emission as well as dependence on fossil fuel about 10 years ago.

The German government’ subsidy is estimated at 7.3 billion EURO in 2011. Germany decided to cut subsidy last year which is a year and half earlier than previously planned schedule. German government does not directly subsidize companies but indirectly support companies through feed in tariff. It forces utility providers to pay higher price for solar energy generated from solar systems installed at homes or else where. Therefore, the cost of solar generated power is shared by all consumers. Because subsidy benefit is received by individuals or power generating entities, the place of production of solar components is ignored.

America also provides subsidy for solar industry. Last month, American government extended Cash Grant Program for another year. The program bears 30% of cost of building solar power stations incurred. Notably, any company that built a solar power plant can receive the subsidy benefit without any restriction on the place of production. As a result, American companies can also benefit from the program and many states cancelled the related tax requirement to attract more manufacturers.

What is obviously different with Chinese subsidy policies is that China only subsidizes domestic manufacturers. These companies sell solar cells to other countries and in the mean time benefit from foreign subsidies. Some western companies also complained about being left out in the process of project bidding in China.

Chinese government did not enclose the amount of investment in solar industry. An authority figure close to the matter said China Development Bank alone provided more than 30 billion US dollars of line of credit. Suntech and LDK are the two most benefited companies, receiving more than half of that amount. The packages these young enterprises receive include cash grant, tax benefit and low interest loans with the longest expiry date up to 6 years.


 

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