China plans dramatic increase in solar capacity to 2GW by 2011

China is set to raise its target for installed solar capacity to 2GW by 2011, a fifteen-fold increase on the 140MW goal it set only last year.

The state-run China Daily newspaper reported today that the National Energy Administration, the government office responsible for energy development plans, has decided to increase capacity over the next two years by providing increased subsidies for solar generators worth $0.16 (10p) per kWh.

Chinese solar panel makers, including Suntech Power Holdings, Yingli Green Energy and LDK Solar, are expected to enjoy significant increases in sales as a result of the revised goal, said the newspaper.

However, it was not clear whether new solar projects to supply the capacity will be funded through China's $586bn stimulus plan, which has a "Buy Chinese" policy of sourcing domestically made goods that could exclude foreign solar firms such as Sharp and Mitsubishi from taking part in any new projects.

There are also concerns in some quarters that the increased subsidy may still not be big enough to entice solar panel makers.

Li Junfeng, deputy director of the Energy Research Institute, a government agency, told China Daily that for manufacturers to make a profit, a subsidy of between $0.19 per kWh and $0.22 per kWh would need to be offered.

The move is the latest in a series of initiatives designed to boost China's renewable energy capacity after the government last month increased its renewables targets for total installed capacity of wind energy and solar power to 100GW and 9GW respectively by 2020.