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China Seeks To Support Its Solar Power Industry

China is the largest solar panel manufacturer in the world but its industry has come under pressure from a variety of sources in recent months including trade disputes with the United States and Europe. In an effort to help its solar panel manufacturers it is to adjust the solar panel feed in tariffs on a regional basis dependant upon “resource conditions”.

Premier Wen Jiabao of China
(image credit: World Economic Forum)

It has also been announced on China’s central government website that China is to provide value added tax benefits to those projects involving photovoltaic panels that is a similar thing that was done for projects involving wind farms. The website makes reference to Premier Wen Jiabao presiding over a State Council meeting.

These latest developments by the Chinese government are an attempt to assist the solar panel industry to deal in a better way with prices and profits that have dropped considerably of late due partly to the over supply of solar panels in the market place. The feed in tariffs are to be above the price that is paid for electricity in the market in respect of projects involving renewable energy.

Wang Xiaoting, who is a Bloomberg New Energy Finance analyst located in Beijing stated: “The feed-in tariffs may vary according to local irradiation conditions. It is less likely that the current tariff of 1 Yuan (16 U.S. cents) a kilowatt- hour will be cut for western regions by 2014, while the rate for less sunny locations may get higher for utility applications.”

The Chinese government also intends to be supportive towards acquisitions and mergers that take place in the solar power industry sector. Furthermore, it also intends to provide subsidies for projects involved in the distribution of solar power with these subsidies being calculated on the electricity power that is generated. Ideally these types of projects will have a capacity of under 6 megawatts and would be attached to those grids having voltages of up to 10 kilovolts.

In 2011, electricity rates were put in place by China for projects in the solar power sector with a view to enticing developers to switch to sources of energy that burnt cleaner. Going back to 2009, China has provided increased prices for power generated by wind farms that are in locations that are not as windy.

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