China to set solar feed-in tariff by year-end, says Suntech chairman

China is preparing to launch a nationwide feed-in tariff for utility-scale solar plants by the end of the year, according to Suntech Power, one of the world's largest makers of solar panels.

The tariff, which would guarantee solar farm operators above market rates for the energy they produce, is expected to fall between US$0.16 and US$0.22 per kilowatt hour of electricity produced at large-scale photovoltaic arrays, Suntech chairman Zhengrong Shi told Power Engineering Magazine at the weekend.

The range is significantly higher than the average rate of US$0.05 per kilowatt hour paid to coal-fired electricity generators and is expected to bolster the financial case for a raft of proposed solar projects.

Shi said that the company was "still awaiting clarification" on the precise details of the policy, but he added that it had "the potential to drive the market up by at least 100MW to 200MW per year".

According to a recent research report by US investment bank Cowen & Co, the establishment of a solar feed-in tariff "could boost Suntech and other China photovoltaic names", many of whom have endured a rough 12 months as a result of weaker than expected global demand and a resulting surplus of solar panels.

Any feed in tariff could also provide a particular boost to China-based manufacturers as a result of the government's controversial "buy Chinese" procurement policy for domestic infrastructure projects.

Some industry observers believe that the solar tariff may vary by region – a policy that applies to China's feed-in tariff for wind farms, which was announced last month.

China's solar tariff rates may be set in accordance to the solar resources for each region, with less sunny areas meriting higher charges to encourage the development of projects that would otherwise deliver lower financial returns.