The feed-in tariff is reduced and installation caps are imposed in China by China’s National Development and Reform Commission (NDRC), the Ministry of Finance and the National Energy Administration (NEA) jointly in the 2018 Solar PV Power Generation Notice. This step is taken to curb the issues the utility-scale and distributed generated solar demand in future.
The government has imposed a cap of 10 GW on the distributed generated (DG) projects for the year 2018. The DG projects that have received grid connection by 31 May 2018 will be eligible for Feed-in Tariff. This order will shift the burden from the central government to local government because of 360 percent increase in solar capacity every year.
About 9.65 GW of solar has been already installed in the first quarter of 2018 out of this about 7.68 GW is distributed solar capacity. So there is a possibility that the 10 GW cap could already have been reached. Feed-in Tariff has also been changed to RMB 0.5, 0.6 and 0.7/kWh for zone 1,2, and 3.
Due to the large volume, the changes in the policies in China will also affect the global market. In 2017, China had 53 GW of solar already installed. But the Asia Europe Clean Energy (Solar) Advisory (AECEA) has lowered its forecast for China’s solar capacity addition for 2018 from 40-45 GW to 30-35 GW. This reduction is a result of policy changes that have been recently passed.
Raj Prabhu, CEO of Mercom Capital Group said :
“The policy changes announced by the Chinese government agencies are significant and will change the solar market dynamics if these policies are implemented as proposed. The possible reduction in demand due to these policy changes will mean crash in component prices and an oversupply situation. This could mean cheaper components for developers and extreme price competition for local component makers. It remains to be seen how the Chinese government will handle job losses that will accompany such measures. The Chinese domestic demand was ramped up 6-7 years ago in response to the global demand crash and to absorb oversupply and minimize job losses. These developments are extremely concerning as they will impact solar markets globally.”
Source: MERCOM India