China is going to cut its feed-in tariffs (FiT) subsidies for solar PV systems for 2017 by 23~40%, according to an announcement published by the country’s National Development and Reform Commission. The new FiT scheme will become effective on January 1st, 2017.
National Development and Reform Commission’s announcement discovers that the new FiT schemes for wind and solar PV power generations were determined depending on cost reductions brought by progresses in relevant technologies.
As for PV FiT rates, the new scheme will officially cover two categories: the ground-mounted projects and the distributed generation projects. FiT subsidies for ground-mounted projects respectively located in resource region I, II, and III will be reduced by 31%, 26%, and 23% to RMB 0.55/kWh, RMB 0.65/kWh and RMB 0.75/kWh.
Meanwhile, distributed PV generation projects will be eligible for FiT subsidies of RMB 0.2/kWh for resource region I, RMB 0.25/kWh for region II, and RMB 0.3/kWh for region III, compared to current FiT rate of RMB 0.42/kWh for nationwide. The new rates represent a reduction of averagely 40%.
A renewable energy expert from China stated that the rapid FiT reduction was a reflection of descending costs of PV systems. Lower costs and lower subsidies will drive PV companies to accelerate their R&D progress to survive, according to the expert.
Furthermore, the reduction will be a strong method of helping the China government to fight against severe solar power generation surplus in the country. Lower FiT subsidies will also loosen Beijing’s financial problems as the country is reportedly facing renewable subsidies short of up to RMB 50 billion in the first half of 2016.