China unveils subsidies of 50 per cent on large solar power projects

China has launched subsidies of 50 per cent on large-scale solar projects under a "Golden Sun" initiative that will be offered over the next two to three years

The Ministry of Finance yesterday announced that projects with a minimum capacity of 500MW would be eligible for the incentive. It will cover half the building costs, including grid-connection, transmission and distribution systems, for the projects.

The subsidy will rise to 70 per cent for solar power systems in remote areas that are not currently connected to the grid.

Under the scheme, grid operators will also be required to buy excess electricity at prices on a par with power from coal-fired power plants.

The subsidy was widely anticipated, with China-based solar panel makers recently announcing a spate of major projects that will be technically eligible for the subsidy.

RenaSola last week said it had reached a preliminary agreement with the city of Yancheng – located north of Shanghai – for a 500MW on-grid solar power project. It will mostly consist of ground-mounted systems and 10MW of rooftop installations to be built over a six-year period.

Meanwhile, Suntech earlier announced that it planned to build three 500MW solar projects in Panzhihua city in Sichuan province, Shizuishan city in Ningxia Autonomous Region and Qinghai province.

The government said the Golden Sun scheme will help put China on track of achieving its ambitious goal of having 2GW of installed solar capacity by 2011.

It will also help boost the bottom lines of China-based solar panel makers, which suffered from a drop in demand earlier this year due to a lack of funding for projects globally.

An alternative incentive plan launched by China in March offers cash grants for smaller installations of at least 50kW. The Golden Sun program is aimed at utility-level projects; 500MW is equal to the capacity of a mid-sized coal-fired power plant.