Solar industry receives a boost from China
The solar industry received a boost today when the Chinese government said it was going to step in to provide incentives to encourage the development of solar installations.
This is good news as the solar industry has had a tough time through the credit crunch and consequently there is an oversupply of solar modules which is driving down prices and effecting manufacturers’ margins.
The Chinese government is saying that they will subsidise solar projects to the tune of around $3 per Watt. Given that solar module prices are currently around $3 per Watt that means that all the developers will effectively pay for is the balance of plant and labour which should be considerably less than what is paid in Europe, Japan and the US. Therefore, this effectively makes the cost of installing Solar in China less than half of what it was before today’s announcement.
The focus is going to be on Building Integrated Solar Photovoltaics (BIPV) and systems will have to be over 50kW to qualify. So we aren’t really talking about Chinese families putting solar panels on their houses as for this you would need nearer 10kW. I guess it will focus on factories, schools, hospitals, etc.
The Chinese are also making sure that subsidised installations will use quality panels requiring at least 16% for monocrystalline panels, 14% for multicrystalline and 6% for thin-film.
The big question is what does this do to solar demand. How many MWs will China install this year and going forward? It’s really hard to say but I think this could add 500-1000MW this year. Planning processes are likely to be fast and installation times will be quicker than in Europe and the US .
China is expected to need to double its electricity generating capacity between 2005 and 2015 and so it looks like solar can play a fairly significant part. China has the manufacturing capacity and technical expertise to continue to expand and this is likely to play a big part in helping the solar industry globally to get to grid parity.
Ultimately this subsidy is about supporting the Chinese solar manufacturing industry and developing a home grown source of additional electricity generation capacity. However, perhaps there is an element of China taking its first steps towards helping the world deal with climate change.
However, you look at it we now have great subsidies in place in the two most important economies: the US and China. Hopefully they can now build on the efforts that governments in Europe and Japan have made to develop the solar industry.
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March 31st, 2009 at 7:38 pm
[...] Thursday I wrote about how China was going to give the solar industry a boost by introducing government backed incentives for solar project [...]