China’s central and local governments have been providing incentive policies to encourage domestic PV installations, and favorable feed-in tariffs (FiTs) or other subsidies are the most implemented ones. However, 25GW of large-scale ground-mounted PV projects in China have not received subsidies yet, which will severely influence future development of solar installation in the country.
A researcher at a China’s renewable energy committee unveiled that approximately 25GW of large-scale ground-mounted PV projects remain unsubsidized until November 2015 even they shall already be. More than two third of a PV project’s income is from subsidies, so it is crucial for the developers to keep their business stably and safely if they were unable to get the subsidies.
Why? The research accounted such situation for 20-year PPAs which are usually signed between project developers and power offtakers. When securing a 20-year PPA, the PV project and its developer are excluded from market mechanism that will improve well-operated companies and expel poor-operated ones. For PV developers that rely on subsidies for future development or for paying debts, the delay of subsidies means that cash flows would be obstruct, and it is crucial for their business and operation.
Subsidizing delay also leads to a double-deadlock between new projects development and sustainable FiT policies. Subsidizing delay seizes reduction of FiT rates because lower FiTs could limit new solar installations; yet flat solar installations reversely prolong FiT cut policies as the nation aims to promote solar installations. Furthermore, continuous, uncut FiT rates will enlarge the amount of total subsidies, which will result in collapse of renewable energy funds.
It is necessary for the Chinese government to deal with the obstacle for achieving its solar installation target. The research suggests some possible methods to overcome the subsidizing delay, and the basic one is to implement the subsidizing policy properly. It is also suggested to increase the amount of the country’s renewable energy fund collecting from additional taxes charged from other resources such as thermal power generation.