China’s Feed-in-tariff Geared to Boost Solar Development

Posted on September 30, 2011 by

In 2009-10, China held its first open bidding for solar PV comprising of two rounds of public tendering processes. The first open bidding was for a 10 MW project in Dunhuang city, Gansu Province and the final feed in tariff realized was 1.09 yuan (USD 0.170). The second round took place in 2010 and led to the announcement of 13 projects with a gross capacity of 280 MW and a final average quoted tariff of 0.85 yuan (USD 0.133).

On the 24th July, 2011, China’s National Development and Reform Commission (NDRC) finally announced its nationwide feed-in-tariff (FIT) for Solar PV projects. The tariffs announced are higher than the ones in 2009-2010 bidding and closer to the 1.1 yuan per kilowatt hour expected by developers. This is set to attract investments from private players that had shied away from the initial bidding processes due to the low tariffs quoted.

In the newly announced FIT scheme, solar PV projects are divided into three categories;

  1. Projects approved before 1 July 2011 and to be completed by December 31. These projects will receive a tariff of 1.15 yuan per kilowatt hour.
  2. Projects approved before 1 July 2011 but would not be completed by December 31. These will get a tariff of 1 yuan per kilowatt hour
  3. Projects approved after 1 July 2011. These will also get a tariff of 1 yuan per kilowatt hour.

Besides the categories mentioned above, the NDRC has laid down a special provision for solar PV projects developed in Tibet. Upon generation, these will receive a tariff of 1.15 yuan per kilowatt hour irrespective of the date of approval by the NDRC or the project completion date.

Along with this scheme, the NDRC also published 18 new technical standards and monitoring guidelines related to wind power technology, generation, grid connection, and project design. These standards could be used as a base for improving solar networking and grid connectivity especially between the solar rich western parts of China and the densely populated eastern provinces.

In the midst of a financial crisis in the west, the FIT scheme could not have come at a better time. The scheme will ensure a return of Chinese developers who had ventured into foreign markets along with foreign investments, thus firmly securing the place of the Chinese solar market as a global force.