China poised to give a major thrust to solar power generation

Gearing up for the international verification of carbon control measures, China has announced schemes to provide major subsidies for solar power generation which is set to grow at an annual rate of one gigwatt (gw) after 2012.

China is ready for the large-scale application of solar power generation which is set to grow at an annual rate of one gigawatt (gW) after 2012, China's Finance Ministry said.

Fifty per cent subsidy would be provided to key equipment installed in the pilot projects, it said. Also subsidies ranging from four yuan (USD 60 cents) to six yuan a watt, would be provided.

The ministry also announced the first batch of 13 pilot projects in different places of the country.

The acceleration of the application of solar power in the country comes after US launched a Section 301 investigation into China's policies and measures related to clean energy, raising concerns over trade barriers in the solar and wind power sectors, state run 'China Daily' reported.

Reports from the Climate Conference at Cancun said China has agreed for international verification of carbon control measures, though there is no official announcement here yet.

In the light of this, China was expected to give a major thrust to solar and other environment friendly technologies to cope up with energy demand.

Chinese solar panel makers have also felt the pinch this year from euro depreciation. Europe is the largest buyer of Chinese solar products.

Currently, 98 per cent of China's solar photovoltaic (PV) products are for export. Export volume reached USD 15.44 billion in 2009, a year-on-year increase of 147.75 per cent.

However, when it comes to domestic usage, China is still at the initial stage. China launched bidding for its first batch of solar power projects in 2009, a 10-megawatt project in Dunhuang, Gansu province. This was awarded to the bid with the second-lowest tender price - 1.09 yuan per kWh.

China started public bidding for its second batch of solar power plants in August, 13 projects with a total capacity of 280 megawatts.

The risks of a long-term exposure to foreign markets have made solar equipment makers rethink their strategy and diversify markets.

"Chinese PV makers are starting to face growing competition from foreign rivals who are gradually recovering from the economic downturn, forcing them to explore domestic markets while diversifying overseas," Jiang Qian, chief industry analyst with China Investment Consulting said.

Many makers of solar power equipment are exploring domestic opportunities and preparing for a booming solar market in China, he said.

But uncertainty about the tariffs, China's electricity grids will pay for the power generated has dampened their enthusiasm, industry players said. As per the plans announced by Ministry of Science and Technology, China is expected to boost its installed capacity of solar generation more than 60-fold to 20,000 megawatts by 2020.